




■ 




* • 





























































THE 

MERCHANTS’ MANUAL 



VMeQrawOfill Book (a lm 

PUBLISHERS OF BOOKS F O 

Electrical World v Engineering News-Record 
Power v Engineering and Mining Journal-Press 
Chemical and Metallurgical Engineering 
Electric Railway Journal v Coal Age 
American Machinist v Ingenieria Internacional 
Eectrical Merchandising ▼ BusTransportation 
Journal of Electricity and Western Industry 
Industrial Engineer 


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J 

THE 

MERCHANTS’ MANUAL/ 


Published under the auspices of 
THE NATIONAL RETAIL DRY GOODS ASSOCIATION 


J 

Edited by 


LEW HAHN/ 


Director 


/ 

AND 


PERCIVAL WHITE 

Research Engineer 


First Edition 


McGRAW-HILL BOOK COMPANY, Inc. 
NEW YORK: 370 SEVENTH AVENUE 

LONDON; 6 & 8 BOUVERIE ST. t E, C. 4 

1924 



f 


Copyright, 1924, by the 
McGraw-Hill Book Company, Inc. 


PRINTED IN THE UNITED STATES OF AMERICA 



TO THE RETAILER 


WHO RECOGNIZES THE OBLIGATION 
TO IMPROVE THE PROCESSES OF RETAIL DISTRIBUTION 
AND STRIVES TO THAT END 


THIS BOOK IS DEDICATED 







* 



















PREFACE 


The average merchant is like a musician who plays by ear. 
He has a quick perception of rhythm, and of melody and har¬ 
mony. He can execute with excellent precision, and his tech¬ 
nique often has more touch of genius than that of the more aca¬ 
demic virtuoso. 

Yet few would deny the advisability of learning to play from 
notes—if notes are to be had. They permit an accuracy of 
detail, a standardization, an ease and certainty and speed of 
reproduction unattainable in any other manner. 

The dry goods merchant has been more or less in the dark. 
He has had to grope. Like the person who plays by ear, he has 
recognized his discords and mistakes almost intuitively; but 
it has been, after all, a matter of guesswork. 

This book is an attempt to put into writing some of the prin¬ 
ciples of store operation and management. It is only a begin¬ 
ning and is far from perfect; for the reason that this business 
has not yet been reduced to a set of standards and rules. Nor 
is it likely to be—certainly not to the extent that engineering is, 
for instance. 

The book is, nevertheless, modeled somewhat on the engineer¬ 
ing handbook, and the editors hope it will fulfil a similar purpose 
—that of a reference book and guide. It is not infallible, and 
it will not take the place of brains and initiative. But to the 
many who need counsel, whose experience is restricted, and 
who are ambitious, it will at least prove suggestive. The book 
has, indeed, been brought out in response to an insistent 
demand from workers of this sort, as well as those in authority. 

Since this is the first treatise of its kind, it will undoubtedly 
be necessary to make revisions, and the editors would appreciate 
any suggestions or corrections sent in by readers. Any prob¬ 
lems which may arise out of a consideration of this manual 
should be referred to the Bureau of Research and Information 
of the National Retail Dry Goods Association. As trends and 

vii 


PREFACE 


viii 

practices become better defined, it will be possible to be more 
specific and more explicit than at present. 

The dry goods business is now in a state of flux. Probably 
no one would care to commit himself as to the outcome of 
present tendencies, significant as they may appear. 

What movements will characterize the future of this industry? 
What factors will predominate? Will the department store, as 
we know it today, give way to some other medium of retailing, 
or will it increase in size and strength? What type of organ¬ 
ized retailing.will take the lead? Will it be the chain of small 
units, like the Penney organization, or the chain of large units, 
like the May stores, or the centralized group, like the Affiliated 
Retail Stores? Or will it be the independent group, unified 
only in their buying and research functions, like the members 
of the Retail Research Association? 

Forecasts of this sort are not within the scope of this book, 
but they should engage every merchant’s attention. They are 
fundamental to the welfare of his store and of his people. 

There is, however, one tendency which is already crystallizing 
rapidly enough to be noted. This is the tendency for mer¬ 
chants to cooperate—to work together. 

Merchants must help each other. They must lend a hand. 
Not only has honesty been found the best policy, but generosity 
has been found just as necessary. For reasons of policy, there¬ 
fore, if for no others, retailers must combine, that they may 
give the better service at lower cost which the public, the press, 
and the government itself are demanding. 

This book is but one stone of the thousands which will be 
needed for completing this edifice of cooperation; and is but 
one of the many endeavors being made by the National Retail 
Dry Goods Association toward this end. 

Acknowledgment is made to the following people who have 
made definite contributions to this book: 

Stanley J. Reyburn, president, Lord and Taylor, New York, 
N. Y.; Felix Vorenberg, Vice-President and Secretary, The Gil¬ 
christ Company, Boston, Mass.; Ira M. Lurie, of Joseph P. 
Day, New York, N. Y.; Dr. Paul H. Nystrom, Managing 
Director, Retail Research Association, New York, N. Y.; 
J. Stock, Warehouse Manager, R. H. Macy and Company, Inc., 
New York, N. Y.; John V. Finn, Delivery Superintendent, 


PREFACE 


IX 


Jordan Marsh Company, Boston, Mass.; C. T. Jones, James 
McCreery and Company, New York, N. Y.; Chas. B. Mackin, 
Purchasing Agent, R. H. Macy and Company, Inc., New York, 

N. Y.; Merrill W. Osgood, Production Manager, Jordan Marsh 
Company, Boston, Mass.; Mrs. B. Campbell, Educational 
Director, The Halle Brothers Company, Cleveland, O.; F. W. 
Walter, Credit Manager, The Bailey Company, Cleveland, 

O. ; John F. Connolly, Secretary, Retail Credit Men’s Associa¬ 
tion of N. Y., New York, N. Y.; John L. Mench, Managing 
Director, Duffy-Powers Company, Rochester, N. Y.; Dr. 
Oswald Knauth, R. H. Macy and Company, Inc., New York, 
N. Y.; Arthur W. Wright, Merchant Manager, Wm. Filene’s 
Sons Company, Boston, Mass.; Wm. Wiesenberg, Merchant 
Manager, The Halle Brothers Company, Cleveland, 0.; M. F. 
Dowley, Merchant Manager, Arnold Constable and Company, 
New York, N. Y.; Frank Black, Publicity Director, and Wm. 
H. McLeod, Advertising Manager, Wm. Filene’s Sons Com¬ 
pany, Boston, Mass.; Owen Rossiter, Display Manager, Wm. 
Filene’s Sons Company, Boston, Mass.; Gordon Schonfarber, 
Sales Manager, Gladding Dry Goods Company, Providence, 
R. I.; Jos. B. Mills, Publicity Director, J. L. Hudson Company, 
Detroit, Mich.; P. J. Reilly, Director, Operation and Personnel, 
Retail Research Association, New York, N. Y.; Mrs. Lucinda 
W. Prince, Director of Prince School, Boston, Mass., and 
Educational Director, The National Retail Dry Goods Asso¬ 
ciation; Mary H. Tolman, Director, New York Exchange for 
Women’s Work, New York, N. Y.; Daniel Bloomfield, of Bloom¬ 
field and Bloomfield, Consultants in Industrial Relations, Boston, 
Mass.; R. L. Harlow, Executive Secretary, Filene’s Cooperative 
Association, Wm. Filene’s Sons Company, Boston, Mass.; 
Elmer Fisher, Store Superintendent, Wm. Filene’s Sons Com¬ 
pany, Boston, Mass.; Elmer Fisher, William Filene’s Sons 
Company, Boston, Mass.; A. N. Frazer, Treasurer, Boggs and 
Buhl, Pittsburgh, Pa.; Jay Iglauer, Treasurer, the Halle Brothers 
Company, Cleveland, 0.; T. L. Blanke, Director, Bureau of Ac¬ 
counting and Control of the Controllers’ Congress, The National 
Retail Dry Goods Association, New York, N. Y; Jesse Isidor 
Straus, President, R. H. Macy and Company, Inc., New York, 
N. Y. 

Especial thanks are due to William A. Fitzgerald, of the 


X 


PREFACE 


Bureau of Research and Information, of the National Retail 
Dry Goods Association, for assistance throughout the period 
of manuscript preparation. Acknowledgment is also made to 
Miss A. Revie, of the same office. 

Assistance with the proof has been rendered by Winthrop A. 
Hamlin and Miss Clara L. Treyz. 

Lew Hahn. 

Percival White. 

New York, N. Y. 

September , 1923. 


CONTENTS 


Page 

Preface ... v ii 

SECTION I 

INTRODUCTION 

Chaptek 

I. Introduction. 3 

SECTION II 

PHYSICAL FACTORS 

II. Location.13 

III. Structure.22 

IV. Layout.35 

V. Store and Office Equipment.51 

SECTION III 

STORE OPERATION 

VI. Receiving. 63 

VII. Storing.78 

VIII. Packing and Shipping.87 

IX. Deliveries.98 

X. Manufacturing.122 

XI. Purchasing Store Supplies.128 

SECTION IV 

STORE ORGANIZATION AND MANAGEMENT 

XII. Organization.139 

XIII. Management.150 

XIV. Finance.169 

XV. Insurance.180 

XVI. The Salescheck System.189 

XVII. Credits.202 

XVIII. Collections.229 

XIX. Statistics.245 

XX. Accounts.257 

XXI. Expenses and Budgets.275 

XXII. Leased Departments.291 


xi 

























CONTENTS 


xii 

SECTION V 

MERCHANDISING 

Chapter Page 

XXIII. Merchandising Effectiveness .301 

XXIV. Merchandise Control.311 

XXV. Buying.331 

XXVI. Stock Keeping.356 

XXVII. Mark-up, Profits and Turnover.373 

XXVIII. Advertising.398 

XXIX. Display.429 

XXX. Sales and Selling Problems.445 

XXXI. Sales Direct by Mail.468 

SECTION VI 

PERSONNEL 

XXXII. Sources and Selection of Personnel.487 

XXXIII. Education and Training.505 

XXXIV. Records and Promotion .522 

XXXV. Remuneration of Employees.537 

XXXVI. Service to Employees.552 

SECTION VII 

SPECIAL SERVICE 

XXXVII. Service to Customers.573 

XXXVIII. Relations with Customers.588 


Index 


601 



















SECTION I 


INTRODUCTION 





THE 

MERCHANTS’ MANUAL 


Chapter I 

INTRODUCTION 

Modern retailing dates from the period of the American 
Civil War. The mail order house, the chain store system, 
the department store, and the specialty store all trace their 
origin to the general store In the department store, which 
is the largest retail unit yet evolved, and the most highly de¬ 
veloped, the trend of development and its character have 
been largely due to the pioneer work of A. T. Stewart, John 
Wanamaker, Marshall Field, Rowland H. Macy, the Straus 
family, and other great American merchants. 

The dry goods industry has tended constantly towards 
large-scale ventures because of certain factors, the most im¬ 
portant of which are as follows: 

1. Character oj the Goods .—While a department store may 
sell many lines of merchandise not strictly of a dry goods 
nature, the bulk of the trading is done in merchandise of this 
character. Much of this merchandise contains a style ele¬ 
ment. Nearly all is of a nature which would cause people 
to come from a distance to purchase. Much of it also con¬ 
sists of allied lines assembled under one roof. 

2. Institutional Character of Dry Goods Stores .—In nearly 
every instance, the dry goods store is an integral part of com¬ 
munity life. Its appeal is universal and not to any one par¬ 
ticular section of the population. The large department stores 
have become so well known that their reputation extends even 
beyond the limits of their own market range. 

3. Advertising Policies.—Dry goods and department stores 
are advertisers. Not only specific offerings of merchandise 

3 


4 


THE MERCHANTS ’ MANUAL 


but also publicity of an institutional character have built up 
a following or clientele. 

4. Service .—The dry goods and department stores must 
give services of various kinds to customers. 

Merchandising Policies.—The pioneers in the dry goods 
trade accomplished their success largely by establishing a new 
code of ethics in dealing with the public. Prior to the early 
department stores, retail selling had been largely a matter 
of bargaining between store and customer. The store pro¬ 
prietor set a price which he thought he could get, and this 
price might not be the same for one customer as for another. 
There was general distrust on both sides. 

In 1865 John Wanamaker advertised “One price and return 
of goods.” A decade or more before this, R. H. Macy had 
done the same thing, and there may have been other sporadic 
instances such as that of Strawbridge and Clothier, of Phila¬ 
delphia, who were leaders in retail reforms. This was literally 
a revolutionary stand for that time, but the initiation of this 
policy was based upon the following conclusions: 

1. That trading is a science. 

2. That trade customs of having asking-and-taking prices, 
of using false labels, and making misstatements in advertising 
were bringing up a class of business men who were scuttling 
the good ships of trade and would sooner or later sweep 
honorable merchantmen from all mercantile seas. 

3. That a radical and immediate change was imperative. 

This policy of fair dealing with customers was not adopted 

immediately and universally, but it was inevitable that it 
should prevail. The effect was not only visible in the prac¬ 
tices of other retailers, but in manufacturing policies as well. 
Once a store agrees to take back unsatisfactory merchandise, 
manufacturers must be found whose products are of such high 
standard that they will not be turned back. 

The ethical standards of the trade are well expressed in the 
Wanamaker guarantee, which reads as follows: 

First That the prices of our goods shall be as low as the same 
quality of material and manufacture are sold for anywhere in the 
United States. 

Second That prices are precisely the same to everybody for same 
quality, on same day of purchase. 


INTRODUCTION 


5 


Third—That the quality of goods is as represented on printed 
labels. 

Fourth—That the full amount of cash paid will be refunded, if 
customers find the articles unsatisfactory, and return them unworn 
and uninjured within ten days of date of purchase. 

The Merchant’s Responsibilities.-—The merchant’s re¬ 
sponsibilities are twofold: first, to the public and, second, to 
his employees. A high standard of ethics in these respects 
has been found to serve the retailer best. 

No other form of business activity touches the general pub¬ 
lic to the extent that retailing does. Every individual must 
obtain some, at least, of his requirements through the medium 
of the retail store. Because of this continuous dependence 
of the public, a serious obligation rests upon retailers to dis¬ 
tribute the necessaries and luxuries of life to their communi¬ 
ties, not only in a way satisfactory to their particular class 
of trade, but also at the minimum charge for such service. 

The community rightfully expects of the merchant not only 
full assortments of merchandise, but the best qualities obtain¬ 
able for the price asked. In striving for this ideal, the mer¬ 
chant may actually regard a purchase made by a customer 
as the giving in trust of money to be used in re-purchasing 
goods for the customer’s account. It follows that the greater 
the volume of purchases made of any merchant, the greater 
must be the responsibility which he assumes in order to supply 
the public’s wants with timely, satisfactory merchandise, sub¬ 
ject to the minimum of overhead expense and the addition of 
a reasonable profit. 

Another obligation assumed by the retailer is that of telling 
the truth. The careless use of advertising has unfortunately 
led to a persistent practice of exaggeration and even of mis¬ 
statement. Advertising which does not tell the truth, what¬ 
ever its effect upon the immediate volume of sales, is a bad 
investment. Misstatement by word of mouth may, perhaps, 
be corrected, but a false statement printed in conjunction with 
the merchant’s name can never be recalled. 

Another obligation which retailers are beginning to accept 
in the proper spirit is that towards employees. This is par¬ 
ticularly true of the department store, which often houses 


6 


THE MERCHANTS’ MANUAL 


under one roof many hundreds of employees. The policy of 
the modern store is to establish a minimum wage for its own 
employees, to hire the best workers to be found, and, by a 
liberal and scientifically arranged course of training, to in¬ 
crease the individual’s earning capacity as rapidly as possible. 

If the store is to go on year after year increasing its volume 
of business, widening its circle of influence, establishing more 
solidly its place as an institution in the community, that 
result can be obtained only by having every employee 
progressing and cooperating all the time. 

Limitations on Responsibilities.—Although it should 
serve the greatest good of the greatest number, business can¬ 
not be conducted as a philanthropic enterprise. The mer¬ 
chant must always be guided by cost. He must examine even 
his responsibilities in the light of cost. If, for instance, costs 
of service to employees mount too high, such as giving too 
much training for the community to afford, or giving too 
much service to the public, the merchant will soon find his 
store losing ground, either to some other competitor with 
more mercenary motives, or to some other medium of retailing, 
such as the chain store or the mail order house. In other 
words, the merchant is constantly confronted with the limita¬ 
tion of cost. 

Other limitations on responsibilities are those imposed by 
law. The department store, as well as other retailers, is 
guided by legal restrictions, both in its dealings with the 
public and with its own employees. The business man must 
realize that the government will not let business alone. His 
attitude should be one of willingness to cooperate with the 
government whenever cooperation is necessary, although he 
can hardly be expected to invite regulation, either from the 
federal government, his state legislature, or the municipal 
authorities. 

Organization and Over-organization.—In order to meet 
his responsibilities on the one hand, and to cope with increased 
costs on the other, the merchant has had recourse to the bene¬ 
fits of organization. 

The science of organization and the size of the retailing 
unit have grown with about equal rapidity. Each has fur- 


INTRODUCTION 


7 


thered the other. Foremost in the ranks of efficiency, of sys¬ 
tem, of planning, of industrial management and of other 
modern trends, has been the department store. 

This movement may have gone too far in some cases, even 
to the extent of over-organization. Over-organization means 
increasing costs instead of decreasing costs. Like the rate 
of production, there is a law of diminishing returns which 
affects the organization of a store. 

Red tape is a sure sign of over-organization. Top-heavi¬ 
ness in the executive branch, and clumsiness in handling de¬ 
partments, are further evidence. This over-organization leads 
to a subordination of individual effort and initiative. The 
store becomes run by routine entirely, and loses ground in 
consequence. 

The framework of the department store has become cast 
in a representative mold. But other forms of retailing media 
have shown rapid growth, particularly in the past few decades, 
despite the fact that they are less well developed. The chain 
store, the mail order house, the house-to-house canvassing 
concern, have all taken a share of retail business which is by 
no means inconsiderable. They compete with the department 
store on the basis of prices almost entirely. Hence the great 
importance attached to costs. The department store, which 
was originally founded as a means of reducing retail distribu¬ 
tion costs, has still in its power the ability to effect the same 
economies which were desirable at the time of its inception. 

Retailing as a Science.—It is good business for the mer¬ 
chant to increase his responsibilities, to enlarge his store, and 
to develop his organization, so long as he keeps his costs at a 
minimum. This he can do best by reducing his business to 
a science. The principles of department and dry goods store 
management, as dictated by best practice, are set forth in 
this volume. 

The large retailing establishment has certain advantages 
and disadvantages distinguishing it from its smaller brethren. 
These have been stated succinctly by Fred E. Clark, of North¬ 
western University: 

1. The large merchandising establishment has certain buy¬ 
ing advantages, due to its ability to hire specialized and skilled 


8 


THE MERCHANTS’ MANUAL 


buyers, and to its buying power, which enables it to require 
lower prices and superior service from supply houses. 

2. When a large part of the operations are mechanical 
and routine in their nature the large house may gain the 
economies, from the division of labor and the use of machin¬ 
ery, which are so important in the economy of large-scale 
manufacture. 

3. To the extent that large merchandising establishments 
must make special efforts to sell their services in order to 
get volume, they are likely to have higher unit costs for sell¬ 
ing than their smaller competitors. The “excessive service” 
of the large sales organizations must be considered a weakness 
due to this necessity of getting volume through rendering 
superior service. 

4. Problems of supervision become greater as the establish¬ 
ment increases in size, but these problems become peculiarly 
difficult when selling is a major activity. This is because, 
briefly, the human element is more important to selling than 
to production, and its operations and interactions are not 
easily routinized. The ordinary methods of controlling rou¬ 
tine matters are, consequently, ineffective, or at best, their 
use becomes more expensive. 

5. The balance which determines the relative economy of 
operation of large and small merchandising would thus seem 
to turn largely on the extent to which the economies found 
in operating the routine and mechanical functions of the 
business, and in purchasing on a large scale, are offset by the 
increased costs for selling and service, and for the adminis¬ 
tration thereof, which arise from the need to obtain a large 
volume of sales. 

The human factors involved in retailing prevent it from 
ever becoming an exact science. Accordingly, the scientific 
mind will always have to be subordinated to what may be 
called the business mind. Theory in business is often sub¬ 
jected to practice. 

The Costs of Distribution.—There seems to have sprung 
up in many sections of the country a feeling that the retail 
distributor is to some degree a parasitic factor. Few people 
appreciate that production without distribution would be 
worse than futile, and that production has not served its pur- 


INTRODUCTION 


9 


pose until distribution has been achieved. Whether distribu¬ 
tion is carried on directly by the producer, or is secured 
through the retailer, it is as necessary as production. It is, 
in fact, an essential part of production. 

It is, perhaps, natural for the public to wish that commodi¬ 
ties could go into consumption with no other cost than that of 
manufacture. But the consumer cannot go directly to the 
point of production. Even though this were possible, it would 
be necessary for the producer to maintain an organization 
for the purpose of meeting the consumer and supplying his 
wants. This would eventually lead to conditions much less 
convenient and far more expensive than the present system 
of distribution. 

But it cannot be denied that the cost of distributing com¬ 
modities has in many cases been excessive. Furthermore, 
there is great public insistence that these costs be cut down. 
On such points, the public is rarely wrong. The cost of dis¬ 
tribution must be lowered. 

One of the best methods of finding means to lower costs is to 
find out and compare the costs of other merchants. This 
is being done through cooperative effort. The retail merchant 
has begun to understand, in a better and broader way, the 
wisdom of proper relations with his fellow retailers. Not 
many years ago, the leading retail stores of any American 
city closely resembled a family of upstarts, each of whom 
was quite sure of his own superiority to all the others, and 
none of whom found it fitting to have relations with anyone 
else. 

Today, fortunately, through the spread of the organization 
idea, retailers have come to realize that most business prob¬ 
lems are larger than the demands of their own business. It 
is often more important to build the prestige of the shopping 
community than in a narrower and more selfish way to build 
up only the store itself. It is possible today for the chief 
retail competitors in any given community to sit down to¬ 
gether and discuss business problems in a large way, and still 
preserve their intense competitive spirit. 

This change has been brought about through the formation 
of retail associations, the local retail trade board, the state 
merchants’ associations, and the national trade associations. 


10 


THE MERCHANTS’ MANUAL 


All have contributed greatly to the broader point of view. 
The holding of conventions at which business problems are 
discussed and where visiting merchants come in contact with 
the most progressive minds in their line of business has in¬ 
culcated a social spirit in men whose interpretation of busi¬ 
ness had led them formerly to be secretive and strongly indi¬ 
vidualistic. 

But only the beginnings of cooperation have been estab¬ 
lished. How far the influence of cooperation, organization, 
and coordination are to be developed in the retail dry goods 
field is a question which only the future can answer. Few 
retailers have any clear conception of the tremendous influ¬ 
ence retail merchants of the United States could hold and use 
for the benefit of the whole people if they were thoroughly 
and effectively organized. 

The National Retail Dry Goods Association.—The Na¬ 
tional Retail Dry Goods Association offers a basis whereby 
merchants in the dry goods business can cooperate with each 
other. In surveying, from the inside, the course of organiza¬ 
tion in the retail dry goods trade, it is apparent that most 
of the work thus far has been defensive in character. It has 
been true that this work had to be done. The retailer’s posi¬ 
tion has made him a fair mark for many attacks. His func¬ 
tion has been so little understood that legislators, newspapers 
and consumers almost came to believe that the retailer per¬ 
formed no necessary function in the production of merchan¬ 
dise, but that he has established himself in the course of dis¬ 
tribution, and has taken an unfair toll of all which passed 
through his hands. 

Hence it has been necessary for the National Retail Dry 
Goods Association to devote much of its energies to defensive 
work. The greatest opportunity for benefits through organi¬ 
zation in the retail dry goods trade lies, however, not in 
defensive work, but in constructive searching for better and 
more economical methods, in the inculcating and upholding 
of higher ethical standards, and in the building of better 
relations, first among retailers themselves, second, between 
retailer and producer, and third, between retailers and the 
public. 


SECTION II 


PHYSICAL FACTORS 

















' • 






















































































































































































































































CHAPTER II 


LOCATION 

The Importance of Location.—Location is a major factor 
in retailing. The new store seeks the most desirable point of 
retailing vantage. The old store endeavors to capitalize the 
favorable and to overcome the unfavorable aspects of its 
present place of business and constantly to weigh the possi¬ 
bilities of a new location. In either case, the merchandising 
problems connected with the location must be given careful 
consideration. 

No new customer, and few old ones, can be expected to 
sacrifice personal convenience to patronize a store situated 
outside of the retail district, unless sufficient inducement is 
offered. By whatever means this attraction is exerted, the 
retail store must always conduct its policies in such a way 
as to overcome the adverse factors caused by any faults in 
the physical location of the store. 

The ordinary problems in location for a store are usually 
not so much those of finding a new site as those of analyzing 
the present one in order to discover its strong and its weak 
points. Hence, if a store is situated outside, or at the edge 
of, the retail district, and it is necessary by some means to 
attract attention to itself and to its wares, an accurate knowl¬ 
edge of the population within market range, its habits, its 
purchasing power, its transportation facilities, etc., will enable 
that store to base its merchandising plans on a sound 
foundation. 

A large dry goods store, or a department store, is a compli¬ 
cated piece of retail machinery. Once established, it is diffi¬ 
cult to move. Thus, the growth of cities and the constant 
shifting of population may leave it stranded outside the limits 
of least selling resistance, yet its tremendous drawing power, 

13 


14 


THE MERCHANTS ’ MANUAL 


intelligently exerted, may for a time at least overcome the 
adverse factors and make the store a financial success. 

To overcome these factors, it is necessary to understand the 
effect of location on the store and on the customer. 

The Retail District.—Each type of retailing has what 
might be called a 100 per cent location, which may be defined 
as a site past which the largest number of potential customers 
pass daily without reference to special attractions offered by 
the store. 

In each city there is a definite retail district, or several 
retail districts, one of which is the most important, and con¬ 
tains the large department stores, the prominent specialty 
shops, etc. In the larger suburbs miniature shopping districts 
are found. 

There are two reasons for this grouping of retail activity: 
In the first place there is the added and combined competition 
which tends to attract trade, and in the second place there is 
the convenience of the customer. The dry goods store natu¬ 
rally desires to extend a shopping appeal to the public, and 
it is a well-recognized attribute of “shopping” that the cus¬ 
tomer desires to compare values. Hence the great advantage 
of grouping several stores of one type in the same vicinity. 
Opportunity to shop is particularly important for the woman 
customer; not so much so for the man, who is likely to buy 
at the most convenient place. 

The advantage of having stores located close together be¬ 
cause of the increased competition lies in the possibility of 
one store drawing trade from customers who had planned to go 
directly to one of the competitors. This possibility enhances 
the importance of the well-arranged and timely window 
display. 

Retail districts rarely remain fixed. There is a definite 
shifting of business centers all over the country, with such 
notable exception as Chicago, where the peculiar location of 
the Loop District has concentrated so much of the business 
into one center. The possibility of extending the retail dis¬ 
trict along the Lake front waits upon the initiative of some 
store ready to undertake the pioneering risk entailed in such 


LOCATION 15 

a venture. The physical disadvantages of such a task are, 
however, sufficient deterrents. 

Pioneering, particularly for a dry goods or department store, 
is dangerous. For one case that proves successful there are 
many failures. An actual situation in an Eastern city is a 
well-known example of the difficulties to be overcome in 
starting a new retail district. Some years ago a group of 
prominent business men endeavored to establish a new shop¬ 
ping center, some distance from the main retail district. Two 
hotels and a large, beautiful, eight-story department store 
were erected. Unable to find a tenant, they opened their own 
department store, and for a considerable number of years ran 
the store at a loss. The fault did not lie in the market range 
but in the superior attractions of the long-established retail 
district. Women living in the vicinity of the new store would 
go a mile farther for the privilege of shopping in the estab¬ 
lished district where there were many stores. 

The store was reorganized finally and placed under new 
management. It was recognized that the store labored under 
difficulties of location, but by intelligent study of the popu¬ 
lation and its needs it has progressed rapidly in the past few 
years, and within a few years more this department store may 
be able to create a new shopping district in this city. 

An important factor in New York City, and also in a 
number of other large cities, is the creation of a new shop¬ 
ping district due to the location of automobile display rooms. 
These usually extend somewhat away from the main shopping 
district along an important avenue of traffic, but in the begin¬ 
ning away from the highest rent district. As soon as a half 
dozen or more large, progressive automobile concerns are 
definitely located, a bank is apt to locate in the near vicinity. 
This is usually a good start, for the public is strongly inter¬ 
ested in automobiles and takes readily to visiting such dis¬ 
tricts, and it becomes only a matter of time until the rest 
of the city follows. Such a condition may eventually lead 
to a breaking in the solid ranks of the Loop District in 
Chicago, as most of the large automobile show-rooms have 
opened up stores along the Lake front. Boylston Street, 
Boston, is another example. 


16 


THE MERCHANTS ’ MANUAL 


Overcoming Defects in Location.—There are various 
methods of attracting trade out of its accustomed channels, 
chief among which are publicity, low price, and quality 
products. 

A store which does no advertising requires the best possible 
location. The moment a store advertises adequately, it starts 
to overcome defects in location. It attracts customers to its 
doors who otherwise would not come there. A dry goods store 
is essentially an advertiser, since so large a portion of its 
stock consists of shopping lines. As it sells necessities as well, 
location is exceedingly important. 

Low prices will always draw a certain type of trade. Cou¬ 
pled with adequate display it forms a powerful combination, 
trading as it does on the power inherent in the word 
“bargain.” An established reputation that a certain article 
can be had for such and such a price at “Smith’s” will over¬ 
come certain disadvantages due to location. 

While there is a class of shoppers who may be termed 
“bargain hunters,” there is another type which always prefers 
to buy a certain product at a certain place, price being a 
secondary consideration. Hence the store which carries this 
product can count on a certain following. A store possessing 
the exclusive agency of a well-established and favorably 
known nationally advertised product sometimes has this 
advantage, although the great increase in nationally adver¬ 
tised lines has operated steadily to remove such advantage, 
since almost every store can have some competing advertised 
line. 

There are certain locations the defects of which are so 
great as to be almost insurmountable. An example of this 
is the store located half-way between the city retail district 
and the suburban district. Although thousands of people pass 
it daily, it will be a failure, because it cannot offer sufficient 
attraction to induce the requisite volume of trade. It does 
not generally offer that speculative chance for success held 
out by the pioneering location. 

It is generally better to take a site on a side street than to 
locate upstairs, although this is subject to specific conditions. 
In no case should a location be decided upon until after a 


LOCATION 


17 


thorough study of the various points discussed in the following 
pages. 

How to Analyze a Location.—The problem in many sur¬ 
veys of location possibilities is that the owner does not know 
at the end whether he should take a 100 per cent site at a 
high rate or a 70 per cent location at a lower rent. Outside 
of the question of available locations, there are a number of 
points which will help in making the decision: 

1. All sources of information should be tapped. 

2. The aid of the Chamber of Commerce should be obtained. 
All advice should be of a disinterested character. 

3. The peculiar characteristics of the dry goods store, 
whether department store or specialty shop, should be taken 
into consideration. The cigar store and the drug store must 
be directly in the traffic stream. Unit purchases are small 
and rate of turnover high. The dry goods store may prefer 
to spend money on publicity rather than in extra rent. 

A certain section in each city is prominent for its retail 
establishments. Fifth Avenue and Broadway in New York, 
Woodward Avenue in Detroit, Washington and Tremont 
Streets in Boston, Market and Chestnut Streets in Philadel¬ 
phia, and Euclid Avenue in Cleveland are examples of this 
tendency. 

Physical Factors.—Cities with diversified industries are 
best for all-around retailing purposes. That is, periods of 
extreme depression do not affect the buying power of their 
population so much as they do in cities like Detroit, Pitts¬ 
burgh, Fall River and Akron, where the conditions in specific 
industries have so great a direct effect on retail sales. 

Stores dealing in men’s wear are usually on one side of the 
street, while stores dealing in women’s wear are on the other. 
In general, the latter type of store is on the side of the street 
which is shady in the afternoon, because women prefer the 
shady side, and because it is much easier to display colored 
fabrics, etc., where the sunshine does not strike. Plate glass 
becomes a mirror in the direct rays of the sun and window 
reflections are the bane of many a retailer’s existence. 

For the location of a store dealing in women’s wear, there¬ 
fore, the west and south sides are more shady and in higher 


2 


18 


THE MERCHANTS' MANUAL 


demand, other things being equal. Some cities have two 
streets, one for women shoppers and the other for men. In 
Hartford, for example, Main Street is devoted to women’s 
stores and Asylum Street to men's. 

The question of a corner location is difficult to solve. It 
will depend a great deal upon the increase in rent and the 
increase in turnover, and whether one balances or outweighs 
the other. Corner locations are ordinarily esteemed as ap¬ 
proximately 30 per cent more valuable than inside locations, 
due to larger display space, the double traffic stream, and 
better light inside the store. 

The other stores in the immediate surroundings all con¬ 
tribute toward forming the atmosphere of the district. There¬ 
fore, in the case of a new location, the environment is 
important. Vacant buildings denote an unhealthy condition, 
as desirable sites rarely go long untenanted. The condition 
of sidewalks, crossings, etc., may be such as to deter or to 
invite trade, particularly in winter. 

The type of stores in the immediate vicinity should be 
noticed. Department stores, waist and lingerie shops, dry 
goods, cloaks and suits, five-and-ten-cent stores and moving- 
picture theaters are usually found in close proximity, and in 
the majority of cases on the same side of the street, consti¬ 
tuting the woman’s side. 

Accessibility.—The accessibility of a location is generally 
reckoned by the volume of traffic passing by, both on foot 
and in the street. The traffic count is valuable where more 
than one location is being considered, but it is valuable only 
when taken under similar conditions, at the same hours, and 
in the same weather. 

For a department or dry goods store this traffic analysis is 
not so worth while as the larger analysis of the market range 
on which the store can draw. Yet in a way it is exceedingly 
important, because it indicates the number of potential pur¬ 
chasers. If a traffic analysis is made, it is well to differentiate 
men and women. The hours at which traffic is heaviest are 
important as indicating the purpose on which it is bent. Some 
practically worthless locations are passed by a large number 
of people on their way to and from work. 


LOCATION 


19 


A retailer of waists made some conclusions from a traffic 
survey which are worthy of reproduction as showing the prac¬ 
tical value of such statistics: 

If on an average 1,200 women pass in an hour, then 10,800 
will probably pass in a 9-hour day. One in each 100 is 
expected to buy an average $3.00 purchase. 

One hundred and eight women will buy $324 in a day, 
or $97,000 worth in the 300 week days plus one-third, or 
$35,000 worth, on Saturdays, making $132,000 worth gross 
sales for the year. ^ 

Amusement crowds, while not bent on purchasing, are ordi¬ 
narily good window-shoppers, and good window-shoppers fre¬ 
quently make good customers. 

To give an idea of traffic counts in 1921, the following fig¬ 
ures are interesting: (Joseph P. Day) 

Chicago—State Street, southwest corner of Madison, for a 
stretch of 16% hours, 210,000, average of 13,000 per hour, 65 
per cent women. 

Philadelphia—Chestnut Street and Broad, 5,200 between 2 
and 3 p.m. 

Detroit—Woodward and Gratiot, 4,100 between 3 and 4 

p.m. 

Cleveland—Euclid Avenue below Ninth Street, 2,000 
(women only) between 2 and 3 p.m. 

Boston—Washington Street near Avery, 1,700 (women only) 
between 4 and 5 p.m. 

Volume on Saturdays is usually reckoned at from three to 
four times that of week days. 

In making a traffic count the essential thing to remember is 
that it is the people who might buy who are important rather 
than those who pass. Thus a mere count without relation to 
the motives which actuate the passers-by is of little value. 

Parking space for cars has an important effect on the cus¬ 
tomer in certain lines. Unfortunately, the automobile came 
after most retail districts were laid out and in few cities are 
parking regulations such that a woman can leave her car in a 
convenient place long enough to do her shopping. 

The transportation facilities play an important part. The 
transfer point of a trolley line produces a great deal of traffic. 


20 


THE MERCHANTS’ MANUAL 


An entrance to the subway frequently is an attraction, particu¬ 
larly in bad weather. The side of the street on which the car 
stops is the more valuable. The car line serving the residen¬ 
tial district is best, with the occasional exception of the inter- 
urban car bringing in its buyers from the outlying districts. 

The Buying Public.—Certain factors about the buying 
public should be carefully studied, and this applies whether 
the store is about to locate or has already found a location. 

1. The buying power of the community. 

2. The customs of the people. 

3. Competition. 

In regard to the purchasing power of the community, the 
first point to decide is what type of store it will support, and 
the potential volume of purchases. This can be roughly esti¬ 
mated from the incomes of the people. A man with only 
$1,000 a year will have little left over after buying the bare 
necessities of existence. A family with $2,000 will have some 
money to spend for comforts, while the family with $3,000 can 
afford certain luxuries. A family with $3,000 is estimated to 
spend from 12 to 15 per cent of it on wearing apparel. Th* 1 
larger the income, the greater the amount spent for comforts 
and luxuries. Incomes increase in times of prosperity and de¬ 
crease in times of industrial depression. The provident dry 
goods store arranges its offerings accordingly to take advan¬ 
tage of the fluctuations in demand. 

The customs of the people as applied to their buying habits 
play a large part in retailing, particularly in the smaller towns. 
Conservatism of particular communities necessitates a certain 
subdued merchandising policy which would be out of place in 
a more metropolitan locality. Religious customs, racial char¬ 
acteristics, cultural and educational distinctions all play a 
part in distinguishing the peculiar features of one locality 
from those of another. 

The type of retail store which can advertise with profit, and 
in this classification the department and dry goods store is 
easily first, can afford to study carefully the market range, 
that is, the territory which looks to the particular city in 
which it is located for shopping purposes. A great part of New 
England looks to Boston as the center of its shopping activity. 


LOCATION 


21 


New York City proper draws a great deal of out-of-town trade, 
not only from immediately contiguous territory, but from 
distant places. Market zones overlap. 

One of the problems which the small town merchant has to 
face is the attraction of the city store. The interest of the 
city store lies in extending its market range as far as possible. 
Thus, to be situated like Syracuse as the focus of a large num¬ 
ber of out-of-town electric lines provides a heavier traffic than 
in Rochester which has a larger population. Indianapolis is 
noted for its drawing power from the surrounding territory. 

Locations and Rentals.—The layout of the retail district 
is very much the same with some exceptions. There will be a 
Main Street where the principal retail establishments will 
locate. According to Ira A. Lurie, manager of the chain 
stores department of Joseph P. Day, Inc., the man’s side of 
Main Street will rent at $5,000 for a 20-foot store. On the 
women’s side it will be $5,500, and $7,000 or more at the 
corners. 

Specialty shops for exclusive women’s wear such as suits, 
millinery, dresses, and lingerie, will seek out the best cross 
street without a car line, which will encourage automobile 
traffic. Rentals will be about 60 per cent of the Main Street 
locations. 

On cross streets with car lines will be second-class shops for 
both men and women, banks, and office buildings. Although 
easily accessible, they are out of the high-rent zone. 

Towards the railroad station will be the wholesale houses, 
and along the main highways leading to suburban or neighbor¬ 
ing cities and towns are stores for the sale of articles to auto- 
mobilists. Opposite the station will be quick-purchase shops 
such as candy, cigar, fruit stores, shoe-shining parlors, news¬ 
paper stands, etc. 

The location of a dry goods store in a suburb or a small 
town is not so important as in the case of the city. Many of 
the same factors apply only to a less marked degree. The 
greatest difference lies in the fitting of the stock to the local 
demand. Much of the importance of the location will depend 
on the existence of a local competitor. 


CHAPTER III 


STRUCTURE 

By E. A. Van Vleck, 

Of Starrett and Van Vleck, Store Architects. 

The fundamental purpose of a store is to sell goods, not of 
necessity to present an imposing front. Architectural perfec¬ 
tion, while at all times desirable, is important only as it in¬ 
duces trade. Yet the structure of a store is a vital factor in 
efficient retailing. It is the setting in which all retail activi¬ 
ties are carried on. Therefore, not only must it be attractive 
to customers, but it must also provide for the most practicable 
handling of traffic, the display of goods, and the comfort of the 
customer, providing sufficient heat, good ventilation, and ade¬ 
quate lighting. 

Despite the most thoughtful planning, it is probable that 
the majority of store buildings erected to date have proved to 
possess advantages and disadvantages not realized at the time 
of erection. A merchant planning to build or alter should, 
therefore, visit the most modern stores within reach and study 
the features of their construction. It is only in this way that 
the ideal store may be erected. 

The Exterior.—The exterior of the store represents to the 
passers-by the character of the retailing activity within. It 
is an impression contributed to by the store front, the window 
construction, the entrance or entrances, and the facade. From 
an advertising and publicity point of view the effect produced 
should be considered carefully. 

Shops should be differentiated from department stores, as 
the two types require quite different treatment. The depart¬ 
ment store is necessarily designed to meet the requirements 
of the many kinds of merchandise sold. The shop, on the 
other hand, may be specialized and have an individuality 

22 


STRUCTURE 


23 


which is more highly distinguished. The imagination may be 
given more rein in designing the small store than the large. 

There are five points to be considered specially in connection 
with the exterior of the building. These are: 

1. Facade 

2. Signs 

3. The display front 

4. Entrances 

5. Windows 

In the following sections, these five points are taken up in 
detail. 

The Facade.—The facade will reflect the size of the store 
and the type of retailing activity carried on within. For 
example, it is not well to treat the store with a frontage of 
150 feet the same as one with 25. In the first place, it would 
be too expensive. In the second place, the appeal is different. 

The department store relies for much of its success on the 
universality of its appeal. For this reason the appearance of 
the facade must be dignified and in keeping with its surround¬ 
ings. The specialty shop, on the other hand, can be treated 
differently, and in accordance with the particular tastes of its 
customers. The corset shop, for example, may be given a 
“lady-like” appearance through particularized treatment of 
the facade. 

On frontages where traffic is sufficiently heavy and is of 
such a nature that an appeal can profitably be made, as much 
window space should be provided for as is commensurate with 
structural necessities. The value of show-window display in 
selling goods is universally recognized. 

Signs.—Much thought can profitably be spent on the out¬ 
side signs because of their undoubted publicity value. Signs, 
however, must not be sensational. If electric signs are used, 
they must not mar the architectural effect. In many cases 
electric signs may be panelled in so as to present an attractive 
appearance. This has rarely been done, however, and offers 
good opportunity for a merchant to make his store distinctive. 

Briefly, the requisites of a good sign are as follows: 

1. It should be equally effective for day or night use, the 
same sign being made to serve for both purposes. 


24 


THE MERCHANTS’ MANUAL 


2. It should be visible for the greatest possible distance. A 
new customer is often attracted by recognizing a well-known 
name on a sign perhaps a block away. 

3. It should have a dignified and artistic design. It should 
not cheapen but should enhance the building’s appearance. 

Small bronze window signs are frequently attractive ad¬ 
juncts. The larger stores also use bronze tablets at the cor¬ 
ners of the building and flanking the entrances. 

The Display Front.—Display windows may be on the first 
floor only, or on both the first and second floors. The width 
of the street is a determining factor, in narrow streets the sec¬ 
ond-story display window not being advisable. On streets 
along which elevated trains or double-decked buses are oper¬ 
ated, the second-story window should prove valuable for dis¬ 
play space. 

Display windows may be divided into units or form one 
space behind a continuous glass front. Each form has its uses, 
but the latter type is at a disadvantage in that it is hard to 
get good groups for display. The unit window is more digni¬ 
fied, and allows more opportunity for the window dressers. 
It is, therefore, better for the high-grade store. The piers do 
not necessarily have to be of stone, but may be of structural 
metal covered with marble or other substance. 

If an “island” is used, the design will depend entirely upon 
the rest of the layout. It is not so often used on corners as on 
interior locations. When used where the store frontage is 
limited, it adds materially to the display area. It may also 
be used to advantage where there is traffic congestion. 

In rare cases the climate may have an influence. For ex¬ 
ample, in St. Paul, Minnesota, outside windows in winter are 
difficult to use for display purposes, and therefore interior 
windows must be used. 

There are an infinite number of designs for island layouts, 
the form depending on the frontage, the location, the style of 
architecture, etc. 

Entrances.—It is almost axiomatic that the store entrance 
should be on a level with the street. This is not only for the 
comfort of crippled customers, but it is a fact that many in¬ 
dividuals, consciously or not, dislike walking up gteps, even 


STRUCTURE 


25 


though there is but one. Steps frequently are dangerous, 
especially in wet weather, and may be the cause of many law 
suits for personal injury. 

Doors should open easily, of whatever type of construction. 
The smaller stores will have the ordinary hinged doors, while 
the larger stores probably will prefer revolving doors. In any 
case doorways should not be so narrow as to cause conges¬ 
tion. 

The revolving door is considered by many to solve the ques¬ 
tion of ingress and egress in satisfactory fashion, although 
the liability risk is somewhat increased. It tends to reduce 
heating costs by lessening the entrance of cold air. It also 
makes it more comfortable for employees in the selling de¬ 
partments near the door. 

On the other hand many consider the disadvantages of re¬ 
volving doors serious, and believe that double or (in winter) 
triple sets of vestibule swinging doors are preferable. 

Vestibules should be spacious and convenient. Adequate 
provision should be made for heating them. 

Freight entrances should be located as near the receiving 
room as possible and easily accessible from the street. 

Windows.—In the small shop there are usually two win¬ 
dows, out of which a maximum of display value must be se¬ 
cured. They may be ornamented if desired, with granite, 
limestone, terra cotta, or marble. The rest of the front ma¬ 
terial will depend on: 

1. Cost. 

2. Local conditions, such as proximity to the source of the 
material. Something will also depend on how clean the town 
is. In Pittsburgh, for example, the store fronts are practically 
all of terra cotta because of the smoke. 

In the large store the type and size of window construction 
should coincide closely with the demands of the products to 
be displayed. If bulky merchandise is to be shown, as is fre¬ 
quently the case in department stores, the windows should be 
of sufficient depth to permit of adequate display. 

Entrances to windows should be made large enough to admit 
large pieces of furniture. This is essential, even though the 


26 


THE MERCHANTS’ MANUAL 


store may not carry these lines, because the display manager 
will often wish to use furniture in trimming his windows. 

Window construction should be watched carefully so that 
all moisture may be excluded and sudden changes in tempera¬ 
ture avoided. This will prevent condensation of moisture on 
glass and mirrors. 

The Interior.—The cumulative effect of the store’s exterior 
should be such as to induce the customer to enter. Once in¬ 
side the store, the interior arrangement should carry out the 
favorable impression. Not only should it be carefully ar¬ 
ranged and laid out, but color schemes, flooring, ceilings, 
lighting, and cleanliness all have an influence in creating the 
proper atmosphere. 

Interior decoration of the small store and the large store 
may show differences due to the fact that the specialization of 
the small store lends itself to more individual treatment. 

Flooring.—Since the ground floor receives far harder wear 
than other floors, the material of which the flooring is com¬ 
posed should be carefully considered. Much has been said 
and written concerning the cost and merits of one type of 
flooring as opposed to another. However, travertine, marble, 
and tile seem to measure up best to the standards of appear¬ 
ance, durability, non-slipping qualities, and approximate and 
ultimate cost. The higher initial cost of travertine is over¬ 
come by the longer average life. 

Wooden floors are difficult to relay or repair and do not, 
therefore, serve so well for the ground floors where traffic is 
very heavy. On the upper floors, however, hardwood flooring 
is widely used in connection with rugs. 

The granolithic floor is serviceable and comparatively inex¬ 
pensive for service departments. 

Ceilings and Walls.—Ceilings and walls should be made 
as simple as possible. If the expense can be afforded, it is a 
good plan to put in a wainscot to the height of the wall 
fixtures. 

Flat ceilings are ordinarily preferable. Beams should not 
be in evidence unless it cannot be helped. The flat ceiling 
makes for better appearance, better ventilation and better 
light. This does not apply so much to the ground floor, where 





STRUCTURE 


27 


more money may be spent and where decorative effects may 
be used. The use of some insulating material between floors 
is advisable. 

When ornamentation is used, it should not be of a type to 
collect dust. Capitals on columns, for instance, should be in 
low relief. 

Color schemes should be kept simple so that there will be no 
clash with merchandise on display. Neutral tints should be 
favored. Reds, yellows and brilliant colors should be avoided. 
High gloss on the ceiling is not advisable, although extensively 
used in the West. 

Color effects should be such as to favor the artificial light¬ 
ing rather than to retard it. The reflecting values of colors 
and finishes should, therefore, be considered before planning 
out the color scheme. 

Special color schemes may be carried out in certain depart¬ 
ments to give specific effects. 

Fireproof Construction.—There is little excuse for not 
equipping the modern building with adequate fire protection. 
So-called fireproof construction is at best only fire-resistive, 
but maintenance is less, loss of time in rebuilding is shortened, 
and the insurance rate on the building and contents is lower. 

Three factors are ordinarily responsible for the destruction 
of “fireproof” buildings, all of which may be guarded against 
by proper construction and equipments. These are: 

1. Inadequate interior fire-fighting equipment. 

2. Unprotected floor openings. 

3. Unprotected vertical openings. 

The installation of a standard automatic sprinkler system 
is highly advisable in the majority of cases. Such means of 
prevention afford the greatest possible reductions in insurance, 
providing the building is of good construction. 

The sprinkler system may be either wet or dry. In the first 
case the supply comes from city pressure and a roof tank. In 
the second case the water is not admitted to the sprinkler 
pipes until the fire releases the valve. The dry system should 
be used only where the system is likely to freeze, as in the 
case of fur vaults, windows, etc. 

Open well holes should be avoided in construction. Al- 


28 


THE MERCHANTS’ MANUAL 


though they may be made spectacular in appearance, they are 
a handicap from any other viewpoint. Insurance rates, for 
one thing, are increased. The smoke hazard is often worse 
than the fire hazard, since the majority of fires are put out, 
while the smoke spreads through the wells to all parts of the 
store. Furthermore, well holes reduce the value of fire-pro¬ 
tective installations, such as enclosing staircases. Open wells 
also cut up the selling space, and frequently render the access 
to elevators circuitous and difficult. 

Work spaces should be carefully divided from selling spaces 
by fireproof walls. Self-closing fireproof doors should be pro¬ 
vided, as well as emergency exits to permit emptying the store 
in a minimum of time. 

Stairways.—Stairways serve two purposes; first as exits in 
case of fire, and second as auxiliary service to the elevators. 
For fire purposes, stairways should almost always be enclosed. 
As exceptions to this rule may be mentioned stairways to 
mezzanines; occasionally stairways to bargain basements. 
Furthermore, monumental stairways to the second floor can 
sometimes be left open for the architectural effect. 

It is good policy to locate the stairways in sections at a 
distance from the elevator battery. A woman will frequently 
walk up or down one floor if a stairway is convenient. 

In construction, stairways should be attractive, well lighted, 
and inviting. Large landings of open monumental staircases 
may be used for displaying merchandise. Displays should be 
so placed as not to interfere with passage up and down. Where 
possible, the treads should be not less than 11 inches wide, 
and risers not more than 7 inches high. 

Stairways to the basement will be most frequently used and 
should be made large enough to accommodate the traffic. 
Basement stairs may well be divided into two sections, one 
for down-going and one for up-coming traffic. 

Escalators.—Escalators are primarily installed in stores 
where there is extremely heavy traffic, as the capacity of an 
escalator is practically unlimited. It handles traffic expedi¬ 
tiously and without congestion. 

Whatever type of escalator is used, care should be taken to 


STRUCTURE 


29 


see that it is enclosed at top and bottom with wire glass and 
metal. Escalators should not be placed near elevators. 

It is claimed that escalators have a definite display value 
through the panorama of the store afforded on the ascent or 
descent. 

Elevators.—It is said that the department store uses a 
wider range of elevator equipment than any other form of 
enterprise. It employs passenger elevators, service elevators, 
and freight elevators. 

In the older department stores the elevators are found in 
groups about the store. Careful analysis of store traffic prob¬ 
lems, however, showed that one central group, located some 
distance from the entrances, handles the traffic more satis¬ 
factorily and . with a smaller number of elevators. 

The relation of elevators to entrances is governed by the 
obvious merchandising reason that customers should be made 
to walk across the main floor. The same reason would apply 
to staircases were it not for city ordinances, which demand 
that stairs discharge in or near streets. 

The number of elevator cars will depend on the traffic, the 
location, and the character of the store. Elevators should be 
located so as to distribute traffic throughout the store without 
confusion or congestion and may be grouped against a wall or 
utility space, with selling space in front. 

Wide shallow cars with wide-opening doors are best suited 
to department store traffic, and permit loading and unloading 
at maximum speed. Cars should be of such proportion that 
the width is at least one and three-fifths times the depth, with 
entrance doors the entire width of the car less 18 inches for 
the operator. They should be provided with center opening 
gates and doors. When these are more than 4 feet 6 inches 
wide, they should be pneumatically or electrically operated, 
the latter being more desirable if the cost can be afforded. 

Passenger elevators range in speed from 200 to 300 feet per 
minute in the smaller stores to 300 to 450 feet in the larger 
stores. According to the Sales Service Manager of the Otis 
Elevator Company, the normal interval between departure of 
cars from the first floor is from 40 to 50 seconds. 

Loading and starting of passenger elevators should be under 


30 


THE MERCHANTS’ MANUAL 


the control of an efficient starter. In some cases, to run every 
car the full length of the shaft is wasteful, and therefore a 
system of local and express stops may often be inaugurated, 
varying with the intensity of elevator traffic. Some large 
concerns operate one battery of elevators up only and the 
other down only, to avoid confusion. 

Service elevators are similar to passenger elevators. In 
some stores service elevators are used for passenger traffic 
during certain hours of the day. They should ordinarily be 
located as near the service entrance as possible. 

Freight elevators should be located so that each floor can 
be served conveniently and without loss of time. To this 
end, the grouping plan is satisfactory here as well as in the 
case of the passenger elevators. The type of goods to be han¬ 
dled and the mechanical methods of handling will dictate the 
freight elevator requirements. If trucks are used for con¬ 
veying the stock from the receiving room to the various floors, 
the elevator should be large enough to carry two of them. If 
four trucks are carried, openings at both sides of the hatch¬ 
way will facilitate handling. 

Lighting.—Illumination should be provided in such a man¬ 
ner as not to be spectacular, with enough light to display 
merchandise to the best advantage. In handling goods of 
different character, different light intensities should be used. 
For example, dark materials absorb much more light than 
white goods. 

The fixtures should be sufficient in size and number to pro¬ 
vide the necessary brilliancy without being conspicuous. Peo¬ 
ple should be able to enter and leave the store without having 
the source of light obtrusively thrust upon their notice. 

The lighting installation will vary with the effect desired, 
the finish of walls and ceiling, the height of the ceiling, and 
the type of products to be sold. There are many sensible 
types of lighting fixtures in the direct, semi-indirect, and to¬ 
tally indirect systems. It is necessary to avoid glare resulting 
in eye strain by some form of diffusing or reflecting equipment. 
Even lighting is necessary to do away with shadows, and this 
is secured by symmetrical spacing of the lighting units. 

Special types of glass guaranteeing wonderful efficiency or 


STRUCTURE 


31 


color value should be avoided, for generally they are of little 
worth. Technical data referring to installation of lighting 
systems may be found in the bulletins of the National Lamp 
Works. 

Arrangement of Lighting Units.—The general arrange¬ 
ment of framing and of column spacing will determine to a 
large degree the lighting arrangement. Outlets should be 
spaced to give even distribution and no more than are actually 
necessary to accomplish this should be provided. Innumerable 
drop fixtures should be avoided. High intensity of light source 
is undesirable: pleasing lighting is to be obtained through 
the use of diffusing glass. 

The size of lamp to be chosen depends upon the ceiling 
height, and upon the type of fixture selected. Enclosing units 
and open reflectors should, as a rule, be suspended as high 
above the floor as is consistent with good appearance. 

Lighting should be controllable from a few points, with an 
arrangement so that the major portion of the lights may be 
turned off from the main switchboard, leaving a few well- 
placed lights for cleaning purposes. 

Window Lighting.—The test of a well-lighted window is 
whether more people are attracted to it at night than during 
the day. Normally, a display should be more attractive at 
night because of the contrast of the light within with the 
darkness without. Display lighting has come to be an art. 
The display window is a miniature stage in which the prod¬ 
ucts displayed are the properties. While the lighting must 
attract, it must not distract the attention of the passer-by 
from the articles on display. 

As a general principle, light should never be visible except 
where lighting fixtures are part of the set. Even in this case, 
they should not be very bright. The best lighted window is 
the one where the question of illumination never enters the 
observer’s mind. 

Since the initial function of window lighting is to attract 
attention, the farther the distance from which the window 
draws observers, the better the illumination. This does not 
necessarily depend on the strength of the lights. It depends a 
great deal on circumstances. For instance, the location of the 


32 


THE MERCHANTS’ MANUAL 


stores, the lighting methods in adjacent stores, and the light¬ 
ing on the street itself are all important. The use of colored 
lighting is often very effective, and can be made to determine 
the entire atmosphere of the window display. 

The possibilities in colored lighting permit different treat¬ 
ment of the various show windows in a single store. For 
example, in a large department store, color treatment for the 
various displays will show considerable divergence. For some 
a pinkish tinge may be used, for others an amber tint, and for 
still others a light green. For furs, jewelry, shoes and neck¬ 
ties an approximation of daylight permits efficient display. 

Lighting producing great shadows should be avoided. For 
this reason, lights should be provided at the base of the 
window. Color screens may be used to provide light of even 
intensity. Spot lights are useful for directing light on a special 
gown or fixture. A number of small lamps are preferable to 
one large one giving the same amount of light since they 
give more even distribution. 

Special equipment may be necessary to conceal lighting 
filaments on corner and island windows. 

Show and Wall Case Lighting.—A liberal amount of case 
illumination is generally provided to help sell merchandise. 
The better the illumination, the less necessity exists for remov¬ 
ing goods from the cases for customers’ inspection. 

Lighting units should be well concealed, both from the 
customer and from the clerk who has to face the show-case 
during the whole day. Small lighting units provide less 
obstruction to a clear view of the contents of the case. The 
upper front edge is ordinarily used for lamp and reflector. 

On the wall case there is usually a cornice at the top behind 
which lighting equipment may be hidden. 

Heating.—Stores may be heated by steam, hot water or 
vapor; hot air not being satisfactory except for very small 
stores. Steam is generally used. A two-pipe system is in¬ 
stalled with a vacuum return to relieve air and to insure 
circulation. 

Heating units should be located so as to avoid interfering 
with store fixtures. The usual place is near doors or windows 
where cold air enters. In this way a fewer number of units 


STRUCTURE 


33 


will give as good service. In some cases heating coils may be 
placed on top of store fixtures, although the collection of dirt 
may make this unadvisable. 

The heating of the first floor presents the most important 
problem. If of large area, the indirect system is best. Ex¬ 
traordinary care must also be taken to heat the vestibules, 
but here the blast system should be used, taking the air from 
the store and re-heating. 

Although a majority of stores still use coal, the use of oil 
as fuel is increasing rapidly. The economy, of course, is 
dependent upon nearness to fuel supply. Granted that fuel 
cost for oil is less or even balances that for coal, the results 
of a questionnaire sent to over 200 users of fuel oil by the 
National Retail Dry Goods Association are worthy of note 
by those who contemplate installing oil-burning equipment. 

In all cases there was a saving in labor, one firm reducing 
the boiler room force from 14 to 5, and eliminating entirely 
the services of a man and team carting ashes six days a week. 

Elimination of dust and ashes resulted in a marked decrease 
in dust throughout the store. 

Heating was much easier to regulate. Fire could be started 
and put out without the labor required with a coal installation. 

Depreciation and repairs were less than with coal, and cost 
of installation was rapidly saved in the majority of cases. 
One firm paid for changing systems in seven months through 
savings in heating cost, while many claimed the original cost 
had been saved within the first year. 

Ventilation.—The ventilation problem is important in con¬ 
nection with heating. Many stores are not ventilated prop¬ 
erly and suffer thereby in the estimation of customers and the 
comfort of the salespeople who are required to breathe the 
vitiated atmosphere continuously. 

When the first floor is heated with temperate air, a suitable 
apparatus for changing the air (air machine) may be em¬ 
ployed. This same system may be used during the summer for 
control of temperature. As much as a 10-degree drop in tem¬ 
perature has been accomplished. Much dirt is also eliminated 
by this same method. It is in use successfully in many of the 
largest stores in the country. 

3 


34 


THE MERCHANTS’ MANUAL 


If the basement is used for selling space, its value may be 
increased by proper ventilation, that is, changing the air from 
fifteen to twenty times an hour. 

Ventilation should be provided for all toilet rooms and 
locker rooms, except when the latter are provided with extra 
large interior windows and do not open directly off store 
spaces. 

Plumbing.—Drinking fountains should generally be located 
near stairs or elevators where they are most convenient for 
public use. They should also be provided in work rooms and 
locker rooms. 

Clean, wholesome toilet rooms should be provided for em¬ 
ployees sufficient to accommodate all without loss of time. 
One water closet to eighteen persons is the proper ratio, 
although this ratio is generally determined by law. 

Accommodation for the public should be provided in an 
accessible location. The women’s toilet may generally be 
located near the general rest room, the public telephone, etc. 

Hot water should be provided in toilet rooms for con¬ 
venience of employees and patrons. 

Most cities require standpipes in stair halls as being of 
particular value in fighting adjacent fires. 

Electrical Systems, Etc.—Various signal and control sys¬ 
tems may be operated electrically throughout the store. 
Department head and executive call systems with colored 
lights or numerals, either alone or in addition to an audible 
call system, are frequently installed. 

Electrically operated time clocks are used for employees 
and prove highly satisfactory. The watchman’s clocks are 
likewise operated on the electrical circuit. Electric fire alarms 
are also used in the larger stores. 

Chutes and conveyors are treated in a subsequent chapter, 
as are also miscellaneous equipment destined for a particular 
purpose. 


CHAPTER IV 


LAYOUT 

By C. A. Wheeler, of the Firm of C. A. Wheeler, Inc., 
Designers of Department Store Equipment, Chicago, Illinois. 

The primary matter of importance in any store is how to 
get the merchandise into the store and, after it is sold, out 
again. Therefore, ample receiving, opening, checking, and 
marking-room space must be provided with easy access for 
incoming merchandise. Communication between receiving 
room and reserve stocks must be provided for by means of 
freight elevators, dumbwaiters, or other means of transpor¬ 
tation. 

After the merchandise is sold, the next problem is to get it 
into the customers’ hands. This means passing it through the 
delivery room. Again, ample space must be provided for the 
proper sorting, writing-up, checking and truck space to ac¬ 
commodate the drivers in expeditiously handling their work 
so as to get their loads properly made up. 

When the merchant has tentatively worked out his receiving 
and delivery room problems, then his next big piece of work 
is to sell the merchandise, or at least to make provision for 
selling it. 

Factors in Store Layout.—No two stores carry exactly 
the same lines of goods, nor is the same importance given to 
the same class of goods in all stores. It is impossible to state 
dogmatically that such and such articles should be placed in 
the front, other articles in the rear and still others m the 
center or upstairs. The customer helps to decide this matter. 
When a particular class of goods sells poorly, one of the first 
points to be investigated is its location. 

The larger the store the more difficult it is to decide on 
proper location of departments. The best arrangement will be 
reached only after experiment. 

35 


36 


THE MERCHANTS’ MANUAL 


In laying out a store, the following factors will play an 
important part: 

1. The size of the store. 

2. Location. Arrangement in city stores will differ con¬ 
siderably from that in suburban or rural stores. The owner 
of one store just outside the main shopping district of New 
York City wisely decided that, while people would make their 
larger purchases downtown, the strongest point for him would 
be notions which people would not travel a long distance to 
get. This plan proved successful. 

3. Entrances. The number of entrances and the volume of 
customers using each will obviously play an important part in 
layout. 

4. Lines of customer traffic. Under ordinary conditions 
traffic has a tendency to bear to the right, probably the result 
of our principles of traffic movement in this country. It is 
possible to offset this tendency by arranging aisles and tables 
so as to direct people equally in each direction. 

5. Type of customers. A store frequented by well-to-do 
customers not only reflects this in the type of products carried 
but in store layout. The cheaper grade of stores are arranged 
to give more complete display of bargain articles. 

6. Merchandising and sales policy. There are two distinct 
policies in store layout. The first and the older theory is to 
place the quick-selling goods at the front of the store. This 
naturally results in greater sales of these lines. The second 
and more modern theory is to place the quick-selling mer¬ 
chandise away from the front of the store so that purchasers 
will be compelled to circulate through the store. Along the 
aisles leading to this quick-selling merchandise are placed the 
non-spontaneous types of goods. In this way, although turn¬ 
over of quick-selling lines is reduced, turnover in the non- 
spontaneous lines is increased. 

Since the problems of the large store are somewhat different 
from that of the small store it is best to take them up 
separately. 

Classification of Merchandise.—It is often said that the 

more logical the classification of merchandise the less likely 
it is to be practical. The basis of classification in a dry goods 


LAYOUT 


37 


store may be women’s against men’s and children’s wear; 
fashion wear against staples; exclusive wear against everyday 
wear; high-priced departments against bargain departments; 
volume departments against small sale departments, etc. 

One of the best starting points is to classify goods according 
to whether they are impulse, convenience, necessity, utility or 
luxury articles. 

1. Impulse goods are those which are bought because of the 
attractive display which creates a desire in the mind of the 
customer or reminds her that she has a need for this article. 
Toilet goods, men’s neckwear and candies all fall in this 
classification. Obviously departments carrying impulse goods 
should be located somewhere along the main traffic lanes if 
they are to get the maximum business possible and maintain 
a high turnover. 

2. Convenience goods have a definite use at a definite time. 
Umbrellas, for example, are usually purchased during rainy 
weather and no amount of display or merchandising skill will 
cause any great amount of buying on any other than a cloudy 
or rainy day. Convenience goods are generally located just 
off the traffic routes of the store, yet in such a position that 
when the occasion arises which will promote their sale they can 
be easily displayed and seen by prospective customers. 

3. Necessities, as the name implies, are bought because they 
are needed. There is little shopping around for necessities, 
Consequently, they can be placed on upper floors or in out- 
of-the-way sections of the store. Shoes, furniture, underwear, 
etc., fall in this category of articles which the customer will 
search out. 

4. Utility goods are difficult to separate from impulse goods. 
Tooth paste and talcum powder, and perhaps thread, are often 
bought because some display calls them to the purchasers’ 
attention. Thus, utility goods, which consist of the smaller 
personal comfort items, or the smaller items used in the 
making of useful articles for the home or person, follow the 
same location rules as impulse goods. 

5. Luxury goods are somewhat difficult to define, since they 
are found in almost every department in the higher price 
articles. Jewelry and art goods are almost exclusively luxuries. 


38 


THE MERCHANTS* MANUAL 


Here, again, however, there are two subdivisions—small 
luxuries, such as cheap jewelry bought on the spur of the 
moment, and luxuries for the home and person which have 
been carefully planned for. The first group must be on the 
first floor along a traffic thoroughfare, while the latter may be 
on an upper floor. 

In the arrangement of merchandise it is always the best 
policy to keep lines of merchandise which are correlated in 
close proximity to each other. For instance, jewelry, leather 
goods, umbrellas and kindred novelty merchandise should be 
in one group. Dressmaking items, such as laces, embroideries, 
trimmings, etc., should be in another group. It may be wise to 
keep impulse merchandise towards the front of the store and 
the staple lines further back. 

Grouping of Departments.—Departments are usually 
grouped along horizontal lines, that is, related lines are grouped 
as nearly as possible together on the same floor. For example, 
when a woman goes into a store to buy a dress, she is a 
potential customer for millinery, corsets, shoes and accessories, 
and having these departments conveniently near promotes 
sales. 

Dress accessories, notions, buttons, trimmings and all lines 
pertaining to dress goods, may well be placed together near 
the piece goods department. 

Wm. Filene’s Sons Company of Boston have worked out a 
careful system of vertical grouping as well as horizontal ar¬ 
rangement. For example, the infants’ shoe department was 
placed on the floor below the general shoe department, and the 
misses’ shoe department was also transferred to a different 
floor. But all shoe departments were placed directly above 
one another and all conveniently located near a battery of 
elevators. Signs are displayed prominently in each shoe sec¬ 
tion telling of the location of the other shoe departments. 

A similar plan is followed out for stoutwear sections. For 
example, on the ready-to-wear floor there is a stout section. 
On another floor in the same relative position is a section 
devoted to blouses for stout women. Directly beneath is the 
section for large-sized corsets, etc. By such an arrangement 
each floor can be specialized for a particular type of product, 


LAYOUT 


39 


while coordinated lines are arranged according to this vertical 
arrangement. 

The Main Floor Layout.—As a large number of depart¬ 
ment store customers often never go beyond the first floor, its 
layout is a matter of primary importance. Next to the window 
space, the efficient arrangement of the main floor is most 
effective in making sales. It is only on the main floor and the 
bargain basement that customers walk up and down the aisles, 
inspecting merchandise. When a customer takes the elevator, 
it is for the purpose of finding some specific article. 

It is generally considered that there are three important 
factors affecting merchandise to be displayed on the ground 
floor: convenience to the customer, size of stock, and appear¬ 
ance. 

1. Whatever the customer wants in a hurry should go on 
the main floor. Similarly, impulse goods should be located 
here. Men’s departments are usually on the ground floor be¬ 
cause men will always sacrifice other considerations to con¬ 
venience of location. 

2. The size of the stock has something to do with first-floor 
location. Furniture, rugs, etc., are too large and demand 
plenty of floor space. A large stock of a particular article, 
such as chinaware, sporting goods, etc., also demands a sep¬ 
arate department. But there are many articles the size of the 
stock of which does not warrant separate treatment, and 
which are of general utility. 

3. Since the main floor is the exhibition floor, only articles 
capable of trim display should be shown. 

The following articles are shown by New York stores on 
their main floors: 

Umbrellas, parasols; novelties such as coat hangers, 
thimbles, shoehorns, etc.; jewelry, combs, silverware and 
clocks. 

Veilings, piece goods, dress goods, patterns, hosiery, laces, 
trimmings, women’s underthings, ribbons, perfumes, ivory 
wear, toilet articles, shawls and feathers. 

Bags of all kinds for money, sewing, or traveling; cutlery 
of the better kind; gloves, books, stationery and writing 
materials; men’s wear. 


40 


THE MERCHANTS* MANUAL 


Figure 1 shows the main floor layout of the H. and S. Pogue 
Company, of Cincinnati, Ohio. The original idea had been to 
draw customers to the rear of the store, where the elevators 
were banked. Consequently, instead of the one long counter 
now in front of the elevators, there had been six short counters 
and cases placed end-on to the elevators with aisles between. 



ENTRANCE 1 ■ Show Ll Windows B| | 


entrance-*l_ 

Fig. 1.—Layout of part of main floor of the H. and S. Pogue Company store. 


These aisles were always filled with customers waiting for 
elevators, and the customers desirous of purchasing at the 
short counters had to struggle through the elevator crowd. In 
addition, these short counters took a large amount of sales 
help. A glance at this layout will show how the effort has 
been made to place analogous stocks in close proximity to 
each other. 




































































































































LAYOUT 


41 


A modern layout for the main floor of a moderate-sized 
department store is shown in Fig. 2, from the A. M. Jensen 



Fig. 2. —Floor plan showing location of different departments on main floor 
of the A. M. Jensen Company. 


Company, of Walla Walla, Wash. This layout has been plan¬ 
ned for the maximum of service to customers. An interesting 




















































































































































42 


THE MERCHANTS’ MANUAL 


feature is the fitting and alteration rooms in close proximity 
to the wearing apparel departments. Reserved stock is kept 
in enclosed stock rooms built into the departments. 

Upper Floors.—After leaving the first floor, there is again 
the problem of correlating lines of merchandise to be carried. 
If the store is to handle men’s goods and there is no room for 
anything but the men’s furnishings on the first floor, it then 
becomes necessary to place the men’s clothing department as 
near the first floor as possible. For some unknown reason the 
average man has an antipathy towards a so-called women’s 
store; therefore he must be given every invitation and means 
of transportation to get into the store, get to the merchandise 
he wants to buy, and out again. It is thus well to provide a 
special men’s entrance, opening directly into the men’s fur¬ 
nishing goods on the first floor and then, if possible, to lay out 
the store so that a male visitor can quickly reach the men’s 
clothing department. 

Aside from men’s goods, the logical correlation of mer¬ 
chandise, of course, becomes the women’s, misses’ and chil¬ 
dren’s wearing apparel. If the floor space is large enough, 
these should be on one floor. If it requires two floors then the 
women’s and misses’ goods should be on one. On the other 
should be the children’s outfitting, which should include 
infants’ wear, baby furniture, baby carriages, little girls’ togs, 
girls’ hats, children’s barber shop, boys’ outfitting and cloth¬ 
ing, etc. If the store is large enough to support it, an entire 
floor can be logically allotted to children’s outfitting with 
marked success. Above the ready-to-wear items logically 
come the home furnishing lines of merchandise, which may 
be large or small according to the type of store conducted. 

In the case of the larger department stores the second floor 
carries frequently men’s and boys’ clothing. It is also an 
excellent location for piece goods, including silks, woolens 
wash goods, linens, household cottons, etc. With these are 
a lied lines of patterns, buttons, dressmakers’ findings, dress 
forms, art needlework, etc. 

The third floor is generally given over to women’s ready-to- 
wear goods The purpose here is quite different from the 
ground floor treatment. Purchasers of clothing generally come 


LAYOUT 


43 


with the intent to buy and arrangements are made to that end. 
Figure 3 shows the layout of the ready-to-wear department of 
James McCreery and Company, featuring the open sales floor 
plan. Stock rooms are located in the center while all daylight 
space is taken up with fitting booths, ten individual rooms at 
each end. 



Fig. 3. —The plan of the McCreery floor illustrates the idea of open sales 
space. A main aisle extends from the 34th to the 35th street side of the build¬ 
ing. Across the center of the floor an aisle extends from a tier of elevators on 
one side of the floor to those on the opposite side. Four large stock rooms 
occupy central floor spaces. 

The location of the restaurant depends on whether it is 
meant to serve as a lunch room or as a refreshment stand. 
Many women like to go to an upper floor for lunch where they 
are able to rest and relax, while others merely wish to snatch 
a sandwich and cup of coffee without interrupting their shop¬ 
ping for any great length of time. This would mean that 
restaurants or lunch rooms should be well above the second 
floor, while soda fountains are best located at the rear of the 
first floor. 


















































































































44 


THE MERCHANTS’ MANUAL 


As it is impossible to locate special services or departments 
along any well-defined lines, the best positions should be 
studied out according to circumstances. For example, one 
store found that the ladies’ shoe shining stand did a much 
greater volume of business when located in proximity to the 
women’s rest room than as usual in the shoe department. 

The actual layout of any store is a problem all its own 
because the physical conditions which surround each and every 
institution make it of necessity a separate study, and there 
is no general rule that can be followed. Too many times a 
merchant will see in Mr. Smith’s store a scheme and he imports 
it to his own store; then after he gets it done it fails to work. 
It is always good policy, however, for the merchant, prior to 
planning a new store or rejuvenating his old store, to visualize 
what the other fellow has done and take a trip, visiting a 
sufficient number of shops in cities comparable with his own 
city and stores of like calibre. From these stores he is bound 
to glean good points worth duplicating and bad points worth 
avoiding, and in the end will find the time and money well 
spent. 

Basements.—The bargain basement had its origin in the 
bargain table. Many modern department stores find that the 
bargain basement is a profitable undertaking for selling low- 
priced goods at small margins and eliminating such services 
as delivery and credit. 

Figure 4 illustrates the model basement plan drawn for the 
Lamson Company by Louis E. Schleber. Small island counters 
are preferred. Articles on sale will differ, but all will have 
the common characteristic of low price. In this plan there is 
space for employees’ coat rooms. 

The sub-basement ordinarily contains the power plant, the 
cold storage room, the vault, the packing room, various stock 
rooms, the shipping department, etc. 

The merchant, in determining whether he ought to put in a 
bargain basement, and before deciding definitely, should thor¬ 
oughly analyze the possibilities of his city because his base¬ 
ment must depend largely upon a different clientele from that 
which will patronize the upper floors. Unless the city where 


LAYOUT 


45 


he is located is diversified enough as to population, he must 
be very careful about installing a bargain basement. 

Aisle Tables.—There are two distinct schools of practice 
in regard to aisle tables. Some stores use them continuously; 
others almost never. Yet the consensus of opinion is that the 
aisle table, properly managed, has a very distinct merchandis¬ 
ing value, and should be considered in planning store layouts. 



Fig. 4.—Model basement plan (The Lamson Company). 


There are limitations, however, to the use of aisle tables: 

1. Added congestion which may come into conflict with fire 
department regulations, or seriously hinder circulation of 
traffic in the store. 

2. The aisle table must pay for the rental value of its loca¬ 
tion. As the most desirable place for aisle tables is near the 
main doors on the main floor, this rental value is high. When 
placed near the rear, this objection is overcome but the num¬ 
ber of customers is reduced. 






















































46 


THE MERCHANTS' MANUAL 


3. An aisle table must not crowd permanent department 
counters nor should it interfere with regular department sales. 
That is, it should contain merchandise of a different character 
entirely. 

4. Aisle tables frequently tend to cheapen the store because 
of the almost inevitable untidiness resulting from handling of 
goods by many people. 

There are six arguments in favor of aisle tables set forth to 
offset the limitations: 

1. Aisle tables, through their great display value, will 
greatly increase the sale of impulse goods and will even turn 
many necessities into this type of merchandise. 

2. Aisle tables have a strong attraction for bargain hunters 
and, if located in the rear of the store, would tend to draw 
hundreds of people to them. 

3. Aisle tables may be used to direct the crowds to stair¬ 
ways or elevators which might not otherwise be used. 

4. Aisle tables, when used only for specially priced mer¬ 
chandise, have a tendency to bring a great many customers 
to the store daily to see what is being offered, especially if the 
tables are changed daily, as they should be. 

5. Aisle tables afford the merchant an opportunity of closing 
out many lines of merchandise which might move very slowly 
in regular departments. 

6. At least 90 per cent of the sales secured on bargain tables 
represents extra business which in no way interferes with the 
regular sales of the store. 

Merchandising principles connected with the sale of goods 
on aisle tables are taken up in another section of this Manual. 
It is only necessary to add here that the use of the aisle table 
has proved very effective when used in moderation, and it 
should be considered carefully in the layout of the main floor 
of the large department store and even in the floor layout of 
the smaller dry goods store. 

The Small Store Layout.—The merchant requiring only 

a small-sized store for the conduct of his business naturally 
must conserve both in space and in the method of handling 
his merchandise. The question of salesmen is especially im¬ 
portant. In other words, he must so plan his store that the 


LAYOUT 


47 


minimum number of salespeople can cover the retail depart¬ 
ments properly. His grouping of merchandise and even cor¬ 
relation of merchandise will have to be studied most carefully, 
because he will not have the advantage of the large store 
owner in having separate floors for kindred lines. For instance, 
he may have to carry not only the usual first-floor lines of 
merchandise on the first floor but may have also to carry his 
ready-to-wear departments there. If so he will have a more 
intricate problem than as if these lines could be carried on an 
upper floor. However, the same general principles in store 
layout may be applied to the small store as to the large one, 
taking into consideration the size of the plant. 

The small store carrying a varied stock faces the problem of 
getting it into as small a space as possible without crowding. 
This means the use of all available floor space as well as the 
maximum efficiency in fixtures, while still giving the store an 
air of spaciousness. The individual problem will always 
present special features as described in the early part of this 
chapter. 

Figure 5 represents a small store layout. Men’s furnishings 
are on the right-hand side, women’s on the left. It is almost 
fundamental that men’s departments be placed near the front 
of the store, since it is well known that men dislike to pass 
through departments largely patronized by women, however 
excellent the men’s department at the rear may be. Further¬ 
more, it is more convenient for the many purchases made for 
men by women. The tables in the center can be used to appeal 
both to men and women. Clothing is in the rear with work¬ 
rooms adjoining. 

In Figure 6 the arrangement is for a dry goods store with 
two floors and adapted especially to dimensions about 50 by 
100 feet. On the main floor are umbrellas, neckwear, gloves, 
hosiery, knit underwear, men’s furnishing, jewelry, leather 
goods, stationery, perfumery, art embroidery, patterns, notions, 
handkerchiefs, ribbons, linings, flannels, comforters, quilts, 
blankets and all kinds of cut or yard goods. There is room 
for four bargain tables in the center of the store. 

On the second floor is placed women’s wear, which requires 
some privacy for fittings and an opportunity to choose at 


THE MERCHANTS’ MANUAL 



mall store layout. 


















































































































































































































































































LAYOUT 


49 


leisure. This line includes women’s and misses’ ready-to-wear 
merchandise, house dresses and kimonos, waists, furs, corsets, 
infants’ wear, muslin underwear, and shoes. Three tables at 
the rear serve for display of odds and ends or bargain mer¬ 
chandise. Fitting rooms are also provided. Between the 
elevator and the stairway is a space for the wrapping and 
service desk. 




PLAN OF SECOND FLOOR 


Fig. 6.—Floor layout of two-floor dry goods store. 


Office Layout.—In the department store the layout of the 
offices takes on great importance. The requirements are some¬ 
what specialized. It is necessary to study the duties of the 
groups of office workers, department heads and executives. 
Volume of personal transactions and written transactions is 
influential. 

Those officials who must receive callers frequently should 































































































































































50 


THE MERCHANTS’ MANUAL 


be as near the entrance as is convenient. For example, the 
purchasing agent should be easily accessible, while the plan¬ 
ning department may well be secluded from distraction. 

The top floor of many buildings may be used to good ad¬ 
vantage over its entire area for non-selling departments 
requiring the maximum amount of daylight, such as general 
offices, employees' quarters, work-rooms, receiving, marking, 
and checking rooms, and departments of a like nature. Where 
windows may not be available, it is always possible to locate 
“sawtooth” skylights in the roof with north exposure. 

The question of the location of the credit and accounting 
office is quite often a hard problem. If this department is 
not needed for drawing customers into an otherwise isolated 
location on a selling floor, then it may better be located either 
on the top selling floor, or on the floor just above it, giving 
easy access from the elevators. 

The subject of mezzanines or balconies on selling floors is 
another subject the average merchant has to dispose of. 
Unless the story height is of ample proportion so that below 
and above this balcony or mezzanine there is ample headroom 
of not less than ten feet, mezzanines are not satisfactory. One 
method of making use of them is to devote them to non-selling 
divisions, such as a public waiting room and rest room and 
similar departments. If they can be of sufficient size and are 
supplied with prominent stairways as well as with elevator 
service, they may be used to advantage for retail purposes. 
However, it is necessary to be careful as to what merchandise 
is located on any balcony or mezzanine. The name “mez¬ 
zanine” does not seem to sound so attractive to the customer 
as “second” or “third” or other floor does. In a word, experi¬ 
ence has been that a mezzanine or balcony is not 100 per cent 
retail space. 


CHAPTER V 


STORE AND OFFICE EQUIPMENT 

The tendency toward providing better equipment has never 
been more marked than today. With the willingness on the 
part of merchants to use new appliances has come a flood of 
patents by inventors of fixtures and contrivances for doing 
practically every type of work in a store except the actual 
selling. Even here the effort has been made in some lines to 
reduce retail distribution to a slot machine proposition. 

SALES EQUIPMENT 

The Importance of Stock Fixtures.—Efficient merchan¬ 
dising demands adequate display, full stocks and good sales¬ 
manship. The appearance, the construction, the location and 
the display value of counters, shelves and show cases are 
of primary value to the store merchant. 

A merchant may not be able to remedy the location of the 
store; he may be compelled, through inability to overcome 
structural difficulties, to have some of his departments badly 
located. But there is no excuse for his not installing modern 
stock fixtures. Up-to-date counters, shelves and display cases 
give the maximum display value together with the other ad¬ 
vantages hereafter enumerated: 

1. Appearance of the store. Glass-topped counters, dis¬ 
play cases set in the walls, shelves and drawers with glass 
fronts are inextricably connected with efficient layout. 

2. Display value. Many sales are made with modern store 
equipment which would never have taken place under the old 
conditions. A store with modern sales equipment has a defi¬ 
nite advantage over other stores still clinging to the counter 
and open-shelf idea. If display helps to sell goods in the 
window, it also helps them in the store. Moreover, only a 
certain percentage of people passing by the window are poten- 

51 


52 


THE MERCHANTS’ MANUAL 


tial customers, while nearly all persons passing through the 
store are prospective buyers. 

3. Efficient salesmanship. With the old style of shelving, 
when the customer asked for an article, the clerk would pull 
out half-a-dozen boxes before finding what was wanted. In 
some cases it was not to be found at all until after the 
customer, tired of waiting, had departed. It frequently hap¬ 
pened that the customer saw only a few of the styles which 
the store had in stock. When several customers were being 
waited on at once, or if sales were being made too fast to per¬ 
mit putting away goods, the counter became piled high with 
stock. 

4. Protection to merchandise. Protection is afforded first 
through the closed-in compartments which keep goods free 
from dust and dirt. Protection is afforded secondly in a 
negative manner—through lack of handling. Under the old 
system the frequent pulling out and replacing of articles 
caused them to become rumpled and soiled in a short time. 
Through whatever cause the merchandise might have become 
soiled, it was the frequent reason for merchandising returns 
and dissatisfied customers. 

5. Out-of-stock. To have to notify a customer that a cer¬ 
tain article is out-of-stock is usually to reveal bad planning. 
It usually happens after the clerk has made a lengthy search 
through a large number and variety of manufacturers’ boxes. 
Modern stock equipment does away with this possibility, and 
makes it easy for the buyer to keep track of what goods are 
low. 

The Product and the Fixture.—The product to be sold 
should have a definite influence in determining the type of 
fixture, and this effect has been carefully studied. For ex¬ 
ample, items such as leather goods, toilet articles, jewelry, 
fancy goods, etc., require glass floor cases permitting close 
inspection by the customer, yet without allowing handling. 
Dress accessories, notions, buttons, trimmings and the like, 
need fixtures which are easily accessible to prospective pur¬ 
chasers, even though the salesperson may not be at hand. 
Sliding glass-front display racks and cabinets will keep cloaks, 
suits, dresses and coats in sight yet in good condition. 


STORE AND OFFICE EQUIPMENT 


53 


Revolving wardrobes are available for clothing which per¬ 
mit carrying double the capacity of the old-fashioned type, 
with greater ease in getting at the clothing. It is also pos¬ 
sible to use the block system for clothing fixtures, each size 
taking a separate compartment. 

There is a pronounced tendency in modern department 
stores to develop the shop-within-a-shop idea. French rooms, 
sport shops, shirtwaist and blouse shops are often to be found. 
Specialty shops such as these cannot afford to over-buy, and 
display is all-important. Hence, a good arrangement of the 
stock is to have it displayed in cases round the wall, in back 
of which are the stock rooms. As fast as one model is sold, 
another is brought out, giving a constant air of change and 
variety. 

Standardization of Fixtures.—Mobility is a factor of 
great advantage in store fixtures. It permits rapid change in 
department location. It allows expansion in holiday seasons 
and special arrangements to stimulate sales of slow-moving 
merchandise. Standardization of fixture widths, lengths and 
heights with a view to their interchangeability, therefore, is 
rapidly taking place. 

The greatest step towards standardized store fixtures has 
come through the interchangeable sectional unit plan. Dis¬ 
play sections may be built up not only to meet the demands 
of the product but of the season and the buying interest. An 
old-fashioned store can be equipped in this way, department 
by department, without upsetting the whole store routine. 

Adjustable shelving is made for use by itself or in combina¬ 
tion with the sectional fixtures. These are particularly valu¬ 
able in shoe departments. Shelves may be raised or lowered 
to meet the demands of the moment. 

Designers and manufacturers of store fixtures are always 
willing to help solve difficult problems. 

OFFICE EQUIPMENT 

Naturally, the small store cannot afford and will not need 
the office equipment which the metropolitan department store 
cannot do without. The management in each case must 


54 


THE MERCHANTS' MANUAL 


decide whether the mechanical equipment will do the neces¬ 
sary work quicker and more economically than by hand. 

The modern merchant should always remember, however, 
that human labor should be employed only for occupations 
which cannot be accomplished better or cheaper by mechanical 
means. 

Specific Appliances.—1. Store communications. The small 
store naturally would not need any system of inter-communi¬ 
cation, but in the case of the large department store this is 
essential. In the majority of cases the regular telephone 
system can be utilized through the switchboard operator. 
An excellent way in which to test out the need for special 
inter-communicating equipment is to find out from the tele¬ 
phone operators just how many times such equipment would 
be required. If interior calls represent a large item, it might 
be well to consider putting in a separate system. 

A locator system may be advisable in some cases. Each 
important member of the store’s staff is assigned a code 
number corresponding to a pre-arranged signal. When he is 
wanted on the phone the switchboard operator pulls a lever 
and a sounding device notifies him he is wanted, whereupon 
he can answer from the nearest telephone. 

2. Correspondence. All appliances which can speed up or 
render less expensive the extensive correspondence of the store 
are worthy of examination. 

The addressing machine does more in an hour than the fast¬ 
est typist or penman can do in a whole day. Furthermore, it 
accomplishes its task without mistakes, blots, erasures, dupli¬ 
cations or omissions. An addressing machine is a necessity 
where the store has mailing lists of any appreciable size, and 
is almost a necessity where there is any number of charge 
accounts. 

Letter openers are necessary only where there is a con¬ 
siderable volume of incoming mail. The letter sealer, which 
moistens, presses down the flaps and ejects the letter per¬ 
fectly sealed, is an economy where the outgoing mail is heavy. 

Losses through misappropriation of postage can be avoided 
by using a stamping machine which handles postage under 
lock and key and counts letters as they are stamped. Such 


STORE AND OFFICE EQUIPMENT 55 

a machine will handle about 250 envelopes, cards or folders 
a minute. 

3. Reproduction of written or printed material. A multi¬ 
graph is highly desirable for the medium-sized store and 
necessary for the larger establishments. It produces printing 
and form typewriting in excellent shape and at a high rate 
of speed—from 2,400 to 4,800 an hour. Names and addresses 
on form letters can be filled in on the typewriter with a 
matched ribbon. 

The duplicator is a less expensive device. A stencil is cut 
on the typewriter and from this all copies required may be 
made. While it does not make such a perfect job as the 
multigraph, it is an excellent and economical method of repro¬ 
ducing store notices, bulletins, name lists, etc. 

The autographic register is used where handwriting in mul¬ 
tiple form is desired. It records, numbers, summarizes and 
perforates manifold copies of handwriting, saleschecks, etc. 

The automatic typewriter can be used where a more per¬ 
sonal type of letter is desired. This works from a stencil cut 
by a special machine. 

4. Accounting and auditing devices. Adding and calculat¬ 
ing machines are used in many phases of store activity, in 
other words, wherever adding, multiplying, dividing, or sub¬ 
tracting of figures is required in any quantity. 

The payroll calculating machine is a modification of the 
adding machine. It computes accurately the hours worked 
and the corresponding wage for each man employed. It 
reduces payroll calculation to a simple mechanical operation. 

The bookkeeping machine is a still further adaptation or 
rather combination of adding machine and typewriter. It is 
rapidly replacing old pen-and-ink methods, just as motor 
delivery is taking the place of the horse and wagon. It not 
only promotes speed and accuracy but also reduces the num¬ 
ber of necessary bookkeepers and billers. 

5. Devices for the cashier. The so-called automatic cashier 
which makes change mechanically, is a tremendous time- 
saver, and reduces the chance of errors. By pressing one 
key—the amount of the sale—the machine does the subtract¬ 
ing and the correct change falls into the hand. 


56 


THE MERCHANTS’ MANUAL 


An automatic check endorser is on the market which lists 
and endorses checks at the same operation. 

Every store should find the mechanical check writer a 
worth-while appliance. It protects the payee’s name as well 
as the amount. There is no possibility of eradication and the 
substitution of “cash” for the payee’s name. 

Fire-proof and burglar-proof safes are another office neces¬ 
sity. Books, inventories, records, as well as cash, should be 
protected. No matter how complete the insurance coverage, 
the loss through destroyed records is necessarily complete. 

6. Filing devices. The filing department is one of the most 
important in the store, not only for statistical records, but 
for current records. Consequently filing systems and equip¬ 
ment cannot be chosen too carefully. There are several pos¬ 
sibilities, all of which should be looked into before making a 
final decision. 

The electric tabulating machines which compile, classify, 
and analyze statistical information might possibly be used in 
the largest stores having statistical departments. An accuracy 
and speed totally impossible by any other method can be 
obtained on these machines. 

7. Time clocks. The time clock automatically records the 
time at which all employees enter and leave. A two-color 
printing attachment prints “on-time” registrations in blue 
and late-comers and early-leavers in red. An immediately 
visible record protects the employee against errors and guaran¬ 
tees accurate record of time. 

8. Miscellaneous devices. A time stamp is frequently used 
to keep an accurate check on time of handling all business 
transactions, notices, correspondence, etc. 

Stencil-cutting machines increase delivery efficiency. Mark¬ 
ings are readable and mistakes avoided. 

Computing scales which automatically calculate the value 
of everything weighed upon them, and computing measure¬ 
ment devices for cloth, are also valuable wherever possible 
to use them to advantage. 

Machines for marking price tags, and tickets for affixing 
to merchandise, prevent errors in marking, as well as the mis- 


STORE AND OFFICE EQUIPMENT 57 

reading of price figures. They also save time in the marking 
room. 


TUBE VERSUS CASH REGISTER 

The development of machinery for handling sales transac¬ 
tions is interesting, and explains the conditions now prevailing 
in retail stores. 

The original small store used an open cash drawer. Each 
clerk had access to this. In the larger stores a central cashier 
took charge, to whom clerks or cash boys and girls brought 
money. This system is still in effect. It exhibits the ineffi¬ 
ciency of a system which permits neither dependable records 
nor means of checking returns. 

The development and perfection of the cash register had 
much to do with the introduction of efficient methods into the 
small retail store, but its widespread use was attained only 
after many years of persistent education. 

The first carrier system was introduced about 1880 as a 
means of saving the many steps required by the cashier sys¬ 
tem. It merely connected clerk and cashier, the parcels being 
still wrapped by the clerk. In 1884 the wire line carrier was 
invented and put on the market. 

In 1885 the basket carrier developed and with it the idea 
of inspection of goods. Cable carriers came in 1888 and tubes 
about 1890. 

The small store sales problem was generally solved by the 
cash register and clerk-wrap. But the large store, and par¬ 
ticularly the department store, introduced elements which 
seemed to demand a more centralized system than was pos¬ 
sible through the use of cashiers scattered throughout the 
store. It was not practicable to maintain the close supervision 
over receipts which the management thought desirable. The 
ever-increasing number of employees rendered personal 
knowledge of sales clerks’ moral character impossible and 
hence the inspection plan was generally used as a protective 
device. 

Defects of Inspection Method.—The inspection method 
of handling sales required a large force of inspectors and 
cashiers. Consequently, when the war broke out and help 


68 


THE MERCHANTS' MANUAL 


became exceedingly scarce the tube-inspection system in gen¬ 
eral use throughout the country failed to prove satisfactory. 
Cash registers and clerk-wrap were installed in many depart¬ 
ments. 

A return to normal conditions after the war established the 
fact that for the large store a combination of tube and cash 
register offered the best solution. The question of the exact 
sphere of each has been more difficult to define. The clerk- 
wrap idea, however, has spread rapidly in department stores, 
although some are still operated on the inspection method and 
some have a combination of both methods. 

The cash register can be used effectively in the notions, 
trimmings, ribbon, and other small wear departments. Goods 
are concentrated, distance to register is small, purchases are 
largely for cash, and the speed of the transaction is increased 
if the tube is eliminated. 

For millinery, clothing, etc., where a great many of the 
sales are charged, and where the money in question is larger 
and wrapping takes longer, the tube system seems at pres¬ 
ent to be predominant. 

The use of the cash register for charge accounts requires 
the use of the telephone or some other communicating system 
to secure authorization. The telephone has never proved 
satisfactory for this purpose, and the time consumed in secur¬ 
ing the authorization is much longer when it is considered that 
by the tube system the authorization and the wrapping take 
place at one and the same time. In cases where over half the 
purchases are to be charged the tube system should be care¬ 
fully considered. Even in the case of cash stores tubes are 
used widely, as for example, at R. H. Macy’s, one of the 
largest in the country. 

As far as the possibilities of theft in the two systems are 
concerned, a clever thief will find a way to steal from either 
one. 

The great advantage of the tube system is the uniform sys¬ 
tem for handling cash, charge, C.O.D., advance payment, 
transfers, bank checks, refunds, credits, merchandise coupons, 
discounts, trading stamps, etc. It also does away with the 
need for extra equipment at rush hours or rush seasons. 


STORE AND OFFICE EQUIPMENT 


59 


The great advantage of the cash register is the speed with 
which a transaction can be consummated. This speed, how¬ 
ever, can be attained only under the conditions enumerated 
above. The best equipped stores have both tube system and 
cash registers, the dividing line between the two being fixed 
by local conditions. 















SECTION III 


STORE OPERATION 





CHAPTER VI 


RECEIVING 

Store Traffic. —Store traffic, in its broad aspect, means 
transportation of goods by carrier to the store premises, and 
the movement of merchandise within the store, including local 
delivery. The external features of store traffic include rout¬ 
ing of orders from manufacturers and jobbers, auditing of 
transportation bills, filing of tracers and claims properly 
supported, arranging consolidated and expedited forms of 
shipment and proper protection to the store by insurance 
against the risks in transit. The internal features include 
receiving, checking, marking, warehousing, reserve stockkeep¬ 
ing, packing and local delivery. 

The Traffic Manager. —Scientific supervision of store 
traffic problems is a comparatively new phase of retail mer¬ 
chandising, but it has been long recognized by manufacturers 
as an integral part of their producing machinery, and there 
is no reason why it should not prove equally valuable to the 
retail store. 

Larger stores should place all activities above enumerated 
under the control of a traffic manager. His duties should be 
as follows: 

1. The quoting of rates. 

2. The classifying and routing of shipments. 

3. Complete supervision of the receiving and shipping 
departments. 

4. Complete responsibility for all out-going goods after 
they are placed on the shipping floor and of all incoming goods 
up to the time they are delivered to the various departmental 
representatives on the receiving floor. 

5. Supervision of any and all expenses and claims connected 
with the transportation and handling of merchandise. The 

63 


64 


THE MERCHANTS’ MANUAL 


control and supervision of the methods of handling and trans¬ 
porting of all merchandise received and shipped. 

The National Retail Dry Goods Association during an inves¬ 
tigation of store traffic problems in 1921 found that but two 
per cent of its members employed traffic managers. The other 
98 per cent handled traffic problems through the office and the 
receiving department. 

Incoming Goods.—This chapter deals with goods pur¬ 
chased by the store from the time of leaving the seller until 
received and checked by the store. 

Broadly speaking, incoming goods arrive by freight, express, 
parcel post and boat lines. Rail shipments take care of the 
heavier, rougher and more bulky merchandise. Express ser¬ 
vice is an expedited means of transportation by rail covering 
largely all classes of commodities permissible under their regu¬ 
lations. Parcel post, while comparatively recent, is constantly 
broadening and can offer certain services beyond the limits of 
the other branches of transportation. 

Boat lines, to a large extent, can best serve stores on or 
near the coast and the Great Lakes, but in some instances 
are active competitors of the railroads in delivering to points 
in the interior. They are preferred by some shippers located 
near the boat terminals because of expedited handling. 

How to have goods shipped is one of the first problems to 
come up. It should be decided according to the type of mer¬ 
chandise to be sent, the time element, and the expense. 

Often money which is saved in shipping merchandise by a 
slow route is more than lost in the profits which might have 
been made through having the merchandise in the store at a 
specific time. There have been cases where ready-to-wear 
managers have increased sales and profits of their departments 
by coming to New York with large trunks and by taking part 
or all of their purchases with them for immediate sale at the 
store. 

Occasions come up frequently when the extra cost of send¬ 
ing by express or parcel post is made up through an extra 
mark-up possible because of the timeliness of the merchandise. 
In such a case, the actual cost per pound is usually not so 
important as the selling appeal of the shipment. 


RECEIVING 


65 


In cases where merchandise has been ordered some time 
in advance it is well to consider the cost of shipment by 
various means and to use that which is most economical. 

The Pool Car.—The pool car is one method of giving fast 
freight service from the shipping centers to the merchants of 
various cities. A pool car, or a consolidated car, contains 
merchandise from several shippers to one consignee, or from 
one shipper to one consignee for distribution to several con¬ 
signees. 

The pool car system has several points to recommend its 
use: 

1. Time saved in transit. It is well known that less-than- 
carload lots almost always take longer than full carload lots. 

2. Less breakage. Extra handling at transfer points is 
avoided by full car shipments, and much breakage avoided. 

3. Saving in freight charges. This last item may amount to 
a considerable sum. 

The person in charge of traffic arrangements should make 
it a point to look into possibilities of pooling incoming freight. 

Routing of Incoming Goods.—Merely notifying a manu¬ 
facturer or jobber to send merchandise by freight does not 
mean that it will be routed to the greatest advantage of the 
store. There have been many cases in cities with several 
freight offices that the merchandise has been sent to the one 
farthest removed from the store. 

It should be part of the duties of the man in charge of store 
traffic arrangements to learn the essential facts about the vari¬ 
ous lines over which shipments may be routed, as well as con¬ 
necting lines which form a part of the service. Such informa¬ 
tion will allow buyers to specify the route which will give 
the merchandise to the store in the shortest possible time, and 
with the least chance for damage. 

Tracing of Shipments.—If a shipment does not arrive 
within a reasonable time, it is customary to file a tracer. 
Such requests should be accompanied by a copy of the origi¬ 
nal receipt and descriptive invoice, together with a written 
statement from the consignee that part or all of the shipment 
has not been received. 

In the case of C.O.D. shipments by express, requests to 


66 


THE MERCHANTS ’ MANUAL 


trace should not be made until the lapse of a suitable period 
after shipment was forwarded, the exact length of time de¬ 
pending on the number of days for which the agent at destina¬ 
tion is instructed to hold the shipment. In the case of perish¬ 
able shipments sent C.O.D., tracer will be instituted imme¬ 
diately upon the shipper’s request. 

The company will trace all money and valuable shipments 
upon request. Reasonable time for delivery, of course, must 
have elapsed. 

Filing of Claims.—The filing of claims is often misunder¬ 
stood and occasions a great deal of inconvenience to merchant 
and carrier. Often a claim is filed with the express or rail¬ 
road company without giving any claim number or without 
requiring or insisting upon the carrier’s acknowledgment of 
the claim. 

In the case of the express claim, the store should present 
a detailed statement on a form provided by the express com¬ 
pany or made up by the store. This should show: 

1. Nature and extent of loss and damage. 

2. Invoice price of articles. 

3. Amount of claim. 

With this should be enclosed an exact copy of the shipping 
receipt which will establish forwarding office, date of receipt, 
shipper’s name and address, number of articles, amount of 
value, consignee and destination, prepaid or collect charges, 
and name of employee signing. 

An itemized invoice, a thorough description of the goods in 
case marking has been obliterated, the consignee’s original 
complaint or copy, and any additional information will aid 
materially in the carrier’s investigation. 

Any loss or damage found to exist after delivery should be 
reported to the company’s agent immediately upon discovery 
by the consignee. When such loss or damage is not discovered 
until after the shipment has been opened, the package should 
be kept intact, being particular to preserve all portions of 
wrapping bearing names, addresses, marks, numbers and 
labels, until the carrier’s representative can make an inspection. 

Pending the settlement of any dispute or disagreement, the 


RECEIVING 


67 


store can accept delivery without affecting any valid claim 
existing against the carrier. 

Transit Insurance.—Transit insurance on goods ordered is 
carried by a number of dry goods and department stores. 
The great benefit of such insurance is that the store does not 
have to wait an indefinite period for settlement of claims by 
carriers but receives immediate indemnification by the insur¬ 
ance company which succeeds to the claim. The insurance 
companies settle all claims within thirty days. Payment is 
on the basis of invoice value in the case of delivery to the 
assured. 

It is also possible to insure goods during local delivery from 
store to customer. In this case, the value is assessed at retail 
selling price. 

Certain clauses are interesting. For example, the pilferage 
clause protects merchandise from petty thievery while in 
transit. The assured must give certain warranties, such as 
that the goods are free from breakage, etc. The insurance 
broker should be consulted as to specific uses. 

A standard form of transit policy offered to stores which 
are members of the National Retail Dry Goods Association is 
here reproduced. It is issued by John C. Paige and Company, 
Boston, in the Globe and Rutgers Insurance Company of New 
York: 

This Policy covers goods and merchandise, consisting of Dry Goods and Merchan¬ 
dise usual to Dry Goods and Department Stores, against loss or damage caused by fire, 
lightning, cyclone, tornado, flood, earthquake, theft, pilferage, collision, derailment, and 
all risks and perils of transportation, except as hereinafter specified, from the time the 
property leaves factory, store, storehouse, warehouse or elsewhere at initial point of 
shipment and until delivered at factory, store, storehouse, warehouse or elsewhere at 
final point of destination by land conveyances and/or while on ferries, and/or in cars on 
transfers in connection therewith. 

This Policy also covers the above-described merchandise against the risks here¬ 
after named while in transit by steamers navigating Atlantic and Gulf United States 
coastwise and inland waters, including the Great Lakes and including coastwise ship¬ 
ments on United States Pacific Coast, against loss or damage by perils of the seas or 
fire, general average and/or salvage charges and expenses; but no marine damages shall 
be paid unless amounting to five per cent on any case or package. Merchandise by 
ocean going steamers is warranted to be carried under deck. The risk of craft to or from 
the vessel included; also risks against above-mentioned perils while the merchandise is 
on docks, wharves, piers and/or bulkheads and/or in depots, stations and/or on plat¬ 
forms in custody of railroad, express or truckman or assured’s own conveyance or mes¬ 
senger incidental to either mode of transportation. This policy also covers above- 
described merchandise temporarily stored by railroads or other transportation com¬ 
panies as common carriers during transit. 

1 This Policy covers only in the United States and Canada, but on coastwise voyages 


68 


THE MERCHANTS’ MANUAL 


covered hereunder, steamers may go outside the 3 mile limit if necessary or customary 
in the ordinary course of navigation. 

2 Lightning Clause. —This policy shall cover any direct loss or damage caused by 
Lightning (meaning thereby the commonly accepted use of the term Lightning), not 
exceeding the sum insured, nor the interest of the assured in the property, and subject 
in all other respects to the terms and conditions of this policy. 

3 This Policy covers theft and pilferage. 

4 This Policy does not cover loss of liquids by leakage unless caused by fire, collision, 
derailment or stranding. 

5 This Policy does not cover risks by mail unless otherwise specifically stated herein. 

6 This Policy covers export shipments until ladened on board exporting steamer 
and import shipments after the risks assumed by marine underwriters cease. 

7 This Company shall not be liable for loss of accounts, bills, currency, deeds, evi¬ 
dences of debt, money, notes, or securities. 

8 Crockery, glass and chinaware, musical instruments, household furniture, works 
of art, and other fragile goods or merchandise packed in glass are warranted free from 
loss by breakage unless caused by fire, collision, derailment, stranding or sinking. 

9 In case of loss or injury to any part of a machine consisting when complete for sale 
or use of several parts, the Insurers shall only be liable for the insured value of the part 
lost or damaged. 

10 In cases of damage to labels only, the loss shall be adjusted on the basis of an amount 
sufficient to pay the cost of new labels and relabeling the goods. 

11 Warranted by the assured free from loss or damage to goods by delay, wet or 
dampness, or by being spotted, discolored, mouldy, rusted, frosted, rotted, soured, 
steamed or changed in flavor, except the same is the direct result of a peril insured 
against. 

12 Warranted by the assured that he has not or will not enter in any special agreement 
with the carriers releasing them from their common law or statutory liability, except 
assured has permission to release truckmen from their legal liability in excess of $50 per 
package or as stated in the express receipt provided it is not less than $50. 

13 It is understood and agreed that the assured may accept without prejudice to this 
insurance the ordinary Bills of Lading issued by carrier, but it is warranted by the as¬ 
sured that this insurance shall not enure directly or indirectly to the benefit of the car¬ 
rier or other bailee, by stipulation in bill of lading or otherwise, and any breach of this 
warranty, and any act or agreement by the assured, prior or subsequent hereto, where¬ 
by any carrier or party habile for, or on account of, loss of or damage to any property 
issued hereunder, is given the benefit of any insurance effected thereon, shall render 
this policy of insurance null and void. 

14 It is also agreed that the subject matter of this insurance be warranted by the 
assured free from loss or damage arising from riot, civil commotion, capture, seizure, 
or detention, or from any attempt thereat, or the consequences thereof, or the direct or 
remote consequences of any hostilities arising from the acts of any government, people 
or persons whatsoever, or by order of any civil authority, whether on account of any 
illicit or prohibited trade or any trade in articles contraband of war, or the violation 
of any port regulation, or otherwise. Also free from loss or damage resulting from 
measures or operations incident to war whether before or after the declaration thereof. 

15 In the event of risk of war being assumed by endorsement under this policy, the 
assured warrant not to abandon in case of capture, seizure or detention, until after the 
condemnation of the property insured; nor until ninety days after notice of said con¬ 
demnation is given to this Company. Also warranted not to abandon in case of block¬ 
ade, and free from any expense in consequence of detention or blockade; but in the event 
of blockade, to be at liberty to proceed to an open port and there end the voyage. 

16 This Policy does not cover merchandise otherwise insured, prior or subsequent 
hereto in date, whether such insurance is fire, marine, inland, floating, specific, or insured 
Bill of Lading, excepting for the excess of value beyond the amount of such insurance, 
and shall not be liable tor any loss, unless the amount of such loss shall exceed the 
amount of such other insurance, which said excess only is declared to be under the 
protection of this policy. 


RECEIVING 


G9 


17 This Company shall not be liable for loss caused by neglect of the assured to use 
all reasonable means to save and preserve the property at and after any disaster insured 
against. 

18 In the event of loss, damage, detriment or hurt to said merchandise, caused by the 
perils insured against, it shall be the duty of the assured to use all lawful and proper 
efforts for the safeguard and recovery of the property, without prejudice to this insur¬ 
ance, and it is mutually agreed, that the acts of either party, or their agents, in securing, 
preserving or recovering the property insured, shall not be considered or held to be 
either a waiver or acceptance of an abandonment. 

19 In all cases of loss, the assured shall, at the request of said insurer or its agents, 
assign and subrogate all their rights and claims against others to said insurer at time 
of payment to an amount not exceeding the sum paid by this Company. This Com¬ 
pany is not liable for any loss which, without their consent, has been settled or com¬ 
promised with others, who may be liable therefor. 

20 In case of any agreement by the assured, prior or subsequent hereto, whereby any 
right of recovery of the assured for loss of or damage to any property insured hereunder, 
against any person or corporation, is released, impaired or lost, which would on accep¬ 
tance of abandonment or payment of a loss by this Company, have enured to its benefit 
but for such agreement or act, this Company shall not be bound to pay any loss, but 
its right to retain or recover the premium shall not be affected. 

21 Loss, if any, under this policy shall be immediately reported with full particulars 
to John C. Paige & Co., 65 Kilby Street, Boston, Mass. 

22 Every claim paid hereunder reduces the amount of insurance by the sum so paid, 
and it is a condition of this policy that in the event of loss, the assured agrees to pay 
to the insurer additional premium or premiums, pro rata, on the amount of such loss or 
losses, and the sum insured is hereby reinstated and in force to the full amount, such 
reinstatement or reinstatements to take effect immediately upon the occurrence of such 
loss or losses, and the charge or charges therefor to be made from such date or dates. 

23 All claims hereunder shall be settled in accorance with the usage and customs pre¬ 
vailing in the City of New York, unless otherwise provided for herein. 

24 All adjusted claims shall be due and payable thirty days after the presentation 
and acceptance of proofs of interest and loss at the office of this Company. 

25 No suit or action on this policy or for the recovery of any claim hereunder shall be 
sustainable in any court of law or equity unless the assured shall have fully complied 
with all the foregoing requirements, nor unless commenced within twelve (12) months 
next after the happening of the loss; proviced that where such limitation of time is 
prohibited by the laws of the State wherein this policy is issued then and in that event 
no suit or action under this policy shall be sustainable unless commenced within the 
shortest limitation permitted under the laws of such State. 

26 This policy may be cancelled by either party on giving five days’ notice in writing. 
Pro rata return premium if cancelled by insurer. Short rates to be charged for time 
used if cancelled by assured. 

27 This policy shall be void if assigned or transferred without the written consent of 
the Company. 

28 This entire policy shall be void if the assured has concealed, or misrepresented, 
in writing or otherwise, any material fact or circumstances concerning this insurance 
or the subject thereof; or in case of any fraud or false swearing by the assured, touching 
any matter relating to this insurance, or the subject thereof, whether before or after 
a loss 

29 If any party or parties other than the assured have procured this policy, or any 
renewal thereof, or any endorsement thereon, he shall be deemed to be the Agent of 
the assured, and not of this Company, in any and all transactions and representations 
relating to this insurance. 

30 In the event of loss or damage, payment shall be upon the basis of invoice value 
upon shipments consigned to the assured and of retail value in the case of deliveries by 
the assured to retail customers. 

31 This policy covers merchandise delivered by the assured to customers and return 
of merchandise by customers if at assured’s risk. 


70 


THE MERCHANTS' MANUAL 


Receiving Room.—Every store should have some definite 
place where merchandise may be received, unpacked, checked 
and distributed to the store departments. 

The location of the receiving room is important. It does 
not necessarily have to be on the ground floor, but it should be 
in a direct line with the receiving platform so that a special 
elevator of suitable size may transfer the merchandise ex¬ 
peditiously. 

The receiving room should contain proper equipment, such 
as scales, a small adding machine, a paper baler, tools for un¬ 
packing, a desk, a fireproof file, and a hand truck. 

If on the ground floor, the loading platform should be raised 
so that the tail board of the truck and the platform are on a 
level. Enclosed receiving platforms are best as they prevent 
damage from inclement weather conditions. 

RECEIVING PROCEDURE 

Receiving Records.—Since goods are received chiefly by 
four different means—freight, express, parcel post, and delivery 
from other city firms—it is judged best policy to have sepa¬ 
rate receiving sheets for each of these four methods. Each 
form should be kept in separate loose-leaf binders properly 
marked. This has a pronounced advantage when it is neces¬ 
sary to look up receiving records, since it is not necessary to 
go through the whole mass of records but only those covering 
the particular type. 

Samples of these forms are shown in Fig. 7. While these 
should prove best for larger concerns, smaller stores will find 
a composite receiving sheet best. Such simplified forms are 
particularly valuable where there is no regularly organized 
traffic department. 

The Freight Shipment.—In Fig. 7 the Traffic Group of 
the National Retail Dry Goods Association has endeavored to 
embody all information in connection with a shipment to 
furnish a compact record. 

Records made by the receiving clerk at the store or ware¬ 
house, such as shipper’s name and address, number and style 
of packages, nature of merchandise, etc., are shown. There is 


Traffic Department .Receiving Record FREIGHT Receiver - Data 


RECEIVING 


71 


Receiving 

No. 



a 

5 

a 

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o4 



© • 

1* 



Transfer 
Co & 
Driver 



Car 

Initial 

Si No. 



Bill 

No. 



| Bill 
ICkd. 



Drayage 






Charges 



Rate 



Dept. 



Shipper’s 

No. 



Case 

No. 



Weight 



I 

•H 

1 



Shipper 



W.B. 

Date 



a o 
EP* 



Pwnt of 
Shipment 
k Carrier 





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Remarks 

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Invoice 
N umber 





Shipper’s 

N umber 





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Charge 





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Shipper 





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Point of 1 

Shipment Sub.Nc 










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p 


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£ 



Fig. 10.—For local or city shipments. 
Figs. 7 to 10.—Receiving record forms. 

































































































































72 


THE MERCHANTS' MANUAL 


also included all information connected with the particular 
shipment from a transportation standpoint, such as way-bill 
references and date, delivering agents’ pro number, weight, 
amount of charges, etc., and the receiving number. 

Express Receiving Record.—As illustrated in Fig. 8, the 
express receiving record is similar in character to the freight 
receiving record. All express matter should be weighed care¬ 
fully on receipt, the correct weight entered on the receiving- 
record, and the charges figured by the receiver before pay¬ 
ment is made to the express company. By following this sys¬ 
tem, receiving sheets will show the exact amount paid for each 
day’s business, and form a permanent record which may be 
bound in loose-leaf binders. Those may be kept until the 
legal outlaw limit provided for by each state is past. 

Parcel Post Receiving Form.—The parcel post receiving 
record, Fig. 9, provides columns indicating whether the mail 
is insured; also space for registry number or insurance number, 
etc. Columns headed Special Delivery and Ordinary Mail 
show how parcels are received. A check mark in each column 
is all that is necessary. 

City Sheet.—The city sheet, Fig. 10, provides a separate 
record for goods received from concerns in the same city as 
the consignee. While carrying charges are seldom involved, 
segregation of city deliveries from common carrier merchan¬ 
dise avoids clogging receiving records. The form contains 
space for all necessary information, remarks, etc. 

Routing of Merchandise.—The receiving record carries, or 
should carry, a serial running line number placed on the ship¬ 
per’s delivery slip when signed, as well as on the back of the 
invoice. To help in subsequent identification of the package, 
the same number can be marked on it in crayon when re¬ 
ceived. 

On local store-door delivery, invoice must accompany ship¬ 
ment. For out-of-town shipments, although no invoice ac¬ 
companies the merchandise, the package should be recorded 
on the receiving sheet. Frequent practice requires a memo, 
bill to be made up as a “dummy,” quoting date, sender, num¬ 
ber of pieces, and marked “no bill received.” 

Figure 11 shows the importance and relationship of the dif- 



RECEIVING 


73 


ferent operations involved in the receipt of goods to the re¬ 
ceiving department, whether at store or warehouse. Thus, 
after being received on the platform, merchandise should be 
sent to the receiving room, where it is entered on a floor re¬ 
ceiving sheet, receiving number and name of shipper being 
given. This floor sheet is checked against the receiving plat¬ 
form sheet. All merchandise should be checked in the order 
received. 




Fig. 11.—Chart of operations in receiving department. 


Routing of Invoice.—Invoices should be turned over to 
the Invoice Department for registration, in the order received. 
They are numbered consecutively and marked for the depart¬ 
ment to which they belong. The registration sheet contains 
date of invoice, name, amount and the department for which 
purchased. 

In order to add this information to the invoice, many firms 
use what is known as an apron form, giving name of buyer, 
terms, transportation charges, date received, etc. If every- 



































74 


THE MERCHANTS ’ MANUAL 


thing is in order the invoice is approved. If not, notice is 
given to merchandise section. 

Checking.—Space for checking merchandise should be 
located between the place where it is received and where it is 
to be marked. In large stores a separate room can be used 
for this purpose, divided according to groups of departments. 

All invoices should be entered on the receiving record before 
the containers are opened, and the merchandise examined by 
the checker. 

If desired, a form can be given the checker on which he can 
report shipments on hand at the close of the day, and for 
which he has no invoice. This will enable the receiving room 
office to follow up the manufacturer. 

A dummy invoice is used to enable the receiving depart¬ 
ment to release such merchandise to the selling department. 
This form is in duplicate (in book form), the original being 
perforated, and the duplicate copy a permanent record for the 
checker. The original copy is used exactly like an invoice, 
except that, instead of . being paid by the main office, it is 
matched with the regular invoice when received. 

A claim form, known as a Discrepancy Report, should be 
used in event of a shortage or overage in shipment. 

Each checker should have three files for invoices: 

1. To hold invoices for which merchandise has not arrived. 

2. To hold invoices to be checked during the day. 

3. For invoices approved by checker and to be retailed by 
buyer. 

Experience has shown that containers should be opened, 
merchandise assorted according to style numbers, and counted^ 
before referring to the invoice for the amount. This gives a 
more accurate check. If there is a discrepancy, the merchan¬ 
dise should be checked again by the section head and differ¬ 
ence reported at once to the manufacturer. 

When an invoice has been checked, it should be approved 
by the checker, with the date and his name, and then placed in 
the buyer’s file. In the larger stores, where several checkers 
are required, it has been found efficient to assign certain 
checkers to certain lines of merchandise. 

Both checking and marking of the same merchandise by the 


RECEIVING 


75 


same person should be avoided. Checkers should be tested 
from time to time to determine whether they are checking the 
merchandise accurately. 

Marking.—The buyer, or his representative, retails mer¬ 
chandise upon the invoice or upon a sample piece of mer¬ 
chandise, and inspects for quality of goods. From this invoice 
or sample the marker marks the merchandise. Under some 
systems, the marker is given a symbol which is to appear on 
each ticket so that it may be determined at any time who 
marked the merchandise in question. 

Flexibility of the marking staff is advisable. The assign¬ 
ment of markers from time to time to different kinds of mer¬ 
chandise tends to increase the efficiency of employees and to 
avoid idle periods which arise if markers are confined to a 
few lines. 

In order to reduce the force permanently employed in the 
marking room, some firms are successfully using salespeople 
and other regular employees during certain periods of the day 
when they can be spared from their other duties. 

If portable tables are not used, merchandise, to avoid re¬ 
handling, should be marked on the same table where it is 
checked. No marking should be done in the stock room. 
Modern practice in marking points almost without exception 
to the use of marking machines. 

Merchandise Returns to Vendor.—A separate section of 
the receiving department should be set aside for the return 
of merchandise for credit or repair, and it is desirable, if the 
physical conditions and space warrant it, that such returns be 
packed in this section rather than in the packing department. 

Merchandise which the selling departments wish to return 
should be sent to this section of the receiving department with 
the return slips properly made out. Two forms are to be used 
—one for merchandise which is going out for repair and in¬ 
spection and which will be returned to the department (the 
return of such merchandise will not appear on the manufac¬ 
turer’s account), and the other for returning merchandise to 
the manufacturer for credit. By the use of this form, the man¬ 
ufacturer’s account is automatically charged with the mer¬ 
chandise sent out. 


76 


THE MERCHANTS’ MANUAL 


These two forms should be made in triplicate, the original 
going with the merchandise, the duplicate to the Auditing De¬ 
partment, and the triplicate for the return section’s records. 
Beside the name and address of the manufacturer, this form 
should have a full description of the merchandise and the 
reasons for returning. It is necessary to have a competent 
clerk and packer to take care of the work of this section. 

Return Procedure.—The return form is taken to the 
Auditing Department where it is registered in a book and given 
a register number. This number is put on the tissue which is 
retained in the book in the department stock room and should 
not be voided without getting all copies and stating the reason 
on the tissue for voiding. 

The form, together with the merchandise, will be taken to 
the return section, where the packer will use the triplicate copy 
as a shipping ticket, signing it as a proof of its having been 
shipped. The original copy goes to the manufacturer with the 
merchandise. 

The duplicate copy is to be returned by the return section 
to the Auditing Department, where it will be checked off in 
the register book as having been returned, and then forwarded 
to the Receiving Department, where it should be. kept on file 
as an order for releasing merchandise from the department. 

When repair merchandise is received, the duplicate copy 
should be taken from the file, fastened to the invoice, and re¬ 
ceiving number carried forward on the copy. If only part of 
the goods are returned, notations should be made on the dupli¬ 
cate copy as to the amount returned, and this should be re¬ 
filed until the balance of the shipment is received, or other 
disposition made of it. 

Departments, upon receiving the duplicate copy, will put 
the receiving number and date on the tissue which is in the 
book, as a matter of record that this transaction has been com¬ 
pleted. 

The Auditing Department should check up outstanding re¬ 
pair goods at the end of each month to see whether any have 
been returned without official record. 

Returns for credit should be handled in the same way, with 
the following exceptions: 


4 


RECEIVING 77 

If merchandise has been shipped, duplicate copy should be 
returned to the Auditing Department, where it will be charged 
against the manufacturer. There it will be filed. 

Original copies, on returns or credit merchandising returned, 
should be treated as an invoice. 

It is highly desirable to put repair tickets on merchandise 
going back for repair wherever possible, as this is a means of 
identification when merchandise is returned. 


CHAPTER VII 


STORING 

Distribution of Stock.—After merchandise is properly in¬ 
spected and marked, it is ready either for “forward stock” 
kept on the selling floors, or for the reserve stock section. 

Small or boxed merchandise going to forward stock should 
be moved in trucks provided with lock and key, particularly 
if the forward stock is any distance away or the passage is 
congested. The representative of the receiving room taking 
the merchandise should keep the key in his possession and 
open the truck upon its arrival in the department. The de¬ 
partment will then count the merchandise and sign his receipt, 
which will be kept in the receiving room. 

Wearing apparel should be transported in regular rack 
trucks provided with heavy gingham covers. This merchan¬ 
dise should also be checked and signed for in the department. 

Merchandise which is not ready to be put in forward stock 
at once will be put in the reserve stock section which is under 
the jurisdiction of the receiving department. It is one of the 
essentials of a well-organized receiving department that the 
reserve stock section be adjacent to the checking and marking 
sections. If such is the case, merchandise may be moved in 
open trucks with safety and no receipt is required. 

The principal care in the transportation of stock must be 
to see that careful men handle it so as to reduce the possi¬ 
bility of breakage or loss. 

Reserve Stock Versus Forward Stock.—Although a large 
percentage of merchandise is not ordinarily routed through 
the reserve stock room, nearly every dry goods and depart¬ 
ment store finds it necessary to have either a reserve stock 
room, a warehouse, or both. A reserve stock room does not 
include the stock rooms located near sales fixtures, but mer¬ 
chandise set aside from which goods are transferred in bulk. 

78 


STORING 


79 


The usual plan is to have a regular stock such as is ordi¬ 
narily carried and to have in addition a special reserve stock 
which consists of a minimum number of articles to take care 
of emergencies until new stock has been ordered or received 
from manufacturers or jobbers. This reserve stock will have 
to be determined largely by present stock and the time it takes 
to receive re-orders. The latter condition may necessitate car¬ 
rying a large stock at certain times when deliveries cannot be 
definitely counted on. 

In the toilet goods department of one store, a perpetual 
inventory system was worked out with a minimum stock 
requirement on each article. When a certain quantity was 
reached, re-orders were automatically sent into the market 
by the assistant buyers unless they were notified to the con¬ 
trary. Reserve stock was used only to fill calls for mer¬ 
chandise which had already been ordered but not yet received. 

The reserve stock rooms and warehouses are in particular 
use before the holiday seasons when room ordinarily used 
for forward stock is inadequate for the large stocks of mer¬ 
chandise on hand. 

Stock Room Layout. —The location of the reserve stock 
section should ordinarily be back of the marking section, but 
the physical conditions in many stores do not permit this. A 
model plan would allow the movement of merchandise from 
the receiving table directly back through the various steps 
in the receiving room to its final destination in the reserve 
stock section. 

Although physical conditions do not make it possible for 
any two reserve stock rooms to be alike, there are certain 
fundamentals to be observed: 

1. There should be ample space for shelves and racks with 
plenty of light and air. 

2. Aisle room ample for the movement of trucks should be 
provided. 

3. Table space for receiving, if movable tables are not used, 
should be planned for. 

4. Proper space for the department head and the clerical 
force should be arranged for. 

5. Separate entrances, so that merchandise coming into the 


80 


THE MERCHANTS’ MANUAL 


section in wheelers and empty vehicles going out do not use 
the same route, are desirable if not essential. This does away 
with the crossing of traffic. 

Too little attention has been paid in the past to the reserve 
stock room and the warehouse. One of the important reasons 
for stock and inventory shortages is poor control of stock 
rooms. Good control requires good layout. Hence the fol¬ 
lowing advice, excerpted from the Bulletin of the Taylor 
Society, for August, 1919, is worthy of careful study: 

Crosswise rows rather than lengthwise are preferable in 
oblong sections. In an approximately square section, the rows 
should generally be at right angles to the direction of greatest 
traffic. Rows in different directions, as at right angles to each 
other, or lining all four walls, are to be avoided as far as pos¬ 
sible. Figure 12-A shows the correct crosswise arrangement. 

Straight lines and right turns for aisles and rows will in¬ 
crease economy of space. The width, location, and arrange¬ 
ment of aisles will be governed by the nature of the goods to 
be stored, etc. Main aisles should be wide enough for two- 
way passing and sub-aisles for one-way passage. Where 
possible, floor space along a wall should be planned for storage 
rather than for aisles. Figure 12-B shows a specimen layout 
for floor or platform storage of bulk or case goods, and also 
a layout for bin storage of small or broken package goods. 

Figure 12-C illustrates the system of tiers and bins for use 
in storing small articles. 

Scientific Storage.—1. Marking. The use of letter sym¬ 
bols provides the clearest arrangement for marking storage 
space. The first letter will indicate the largest division in use, 
and other letters will indicate smaller divisions. For example, 
the first letter will stand for the section, the second letter for 
the row, and the third letter for the bin or particular shelf. 
The symbol ACF will mean Section A, Row C, Shelf or Bin F. 

2. Classification of stock. The most up-to-date stock rooms 
classify their stock according to articles of merchandise and 
not manufacturers’ brands. For example, all silk hosiery 
would be segregated in one part of the stock room, or in a 
separate stock room, without any reference to the manufac¬ 
turer’s name. Identification marks should face outwards. 


STORING 


81 



{Bulletin of Taylor Society ) 

Fia. 12-A.—Shows lengthwise rows (incorrect) and crosswise rows (correct). 


Eow BA 


W 


Eow BB 
Eow BG 


Section B 
(Platforms) 


Sub Aisle 


I I 

I t 

--!-i-1- 


w 


Eow BD 
etc. 


Sub Aisle 
—!- 1 — 


Main 


Aisle 


Section A 



1 1 I 1 1 1 

Sub Aisle 











Sub Aisle 











Sub Aisle 











Sub Aisle 


I Eow AA 
W 

Eow AB 

Eow AC 
W 

Eow AD 
Eow AE 
W 

Eow AF 
Eow AG 
W 

I Eow AH 
etc. 


(Bulletin of Taylor Society) 

Fig. 12.-B.—Specimen layout for floor or platform storage for bulk or case 
goods (left); specimen layout for bin storage for small or broken package 
goods (right). 



(Bulletin of Taylor Society) 

Fig. 12-C.—System of bins in tiers for use in storing small articles. 

6 






















































































82 


THE MERCHANTS’ MANUAL 


3. Location of goods in stock rooms and warehouses. No 
definite rules can be laid down as to where a particular article 
should be stored. Generally a heavy article should be given 
the shortest possible haul. Similarly, articles which are con¬ 
stantly being moved in and out should be as near the entrance 
as is feasible. If any articles have to be specially measured, 
consideration should be given to this when assigning them a 
location. Weights which are safe to put in stock rooms should 
be known. 

4. Units of storage. It is advisable to store goods in the 
units in which they will be issued to the various departments. 
It is also advisable to devise some system whereby old goods 
should be used before new ones. 

5. Flexibility. Storage conditions change from year to year, 
from season to season, and almost from day to day. Hence, 
it is very important that the stock room and warehouse be 
laid out so that frequent rearrangement is possible. Remov¬ 
able subdivisions give good results. In emergencies, empty 
packing boxes, stacked one on top of the other, will give extra 
storage space. 

6. Stowing away. Exceptionally heavy articles may be 
placed on the floor. Other heavy goods requiring more than 
one man to handle may be placed on platforms. Small boxes 
and packages may be placed in bins, while articles of un¬ 
wieldy length are placed on racks. Attention should always 
be paid to the nature of the article. Thus brooms should 
stand on handle end or hang, and unprinted paper should lie 
flat. Articles subject to deterioration from cold, dampness, 
heat, dryness, etc., should be protected from these conditions. 
If stowing is commenced at the back left-hand corner and 
carried forward for a complete row before the next is started, 
old articles can be removed before newer ones. If wrappings 
are in bad condition when goods are received for storage, they 
should be replaced. In removing goods, the start should be 
made at the left-hand side. In the space left vacant the newly 
arrived articles can be placed. 

Stock Room Procedure. —Reserve stock section should 
consist of a section head, an assistant, and as many clerks as 
are needed to receive, check and place goods on the shelves. 


STORING 83 

■ They should also have time to attend to clerical duties re¬ 
quired. 

The stock room section acts only as custodian of merchan¬ 
dise on hand, while all inventories are conducted by the selling 
department. 

Two record forms are sufficient for the reserve stock room. 
In many establishments, the reserve stock room has been run 
practically without forms, but lack of control over requisi¬ 
tioned merchandise in open stock rooms has been the cause of 
a great deal of loss. 

On the first form is recorded the stock placed in the stock 
room. Order or bill number is placed on the form, also date, 
cost price, selling price, and sizes. On the other side of the 
form is recorded the requisition number, date, season, cost and 
selling price, number of each size taken, and the total cost and 
total selling price of the article taken out. This sheet should 
be kept in a loose-leaf binder, and one person in the central 
stock room is delegated with the responsibility of taking 
charge of this book as well as of the stock room. 

Figure 13 shows the ordinary form of requisition for goods 
to be withdrawn from the stock room. 

The Warehouse.—A warehouse facilitates the handling of 
large items. It not only saves the overhead cost of handling 
such items, due to the fact that it can be located in a section 
where the rent per square foot is not so high as that of the 
store, but it relieves the store of such items as furniture, 
phonographs, carpets, and of the necessary congestion which 
would be caused by sending such large items from the floor on 
which they are sold through the regular delivery department. 

Where a store has a warehouse, confusion is eliminated by 
the selling department’s signing a requisition which is the 
warehouse’s authority to release the item. Thus the object 
sold is not at any time handled in the store itself, for it is 
received direct at the warehouse and kept there until such 
requisition is sent for it. 

The staff at the warehouse should consist of a capable, 
trustworthy executive in charge, an active, responsible assist¬ 
ant, the necessary receiving and delivery clerks, elevator men, 
and porters. 


84 


THE MERCHANTS' MANUAL 


All that has been said in regard to the layout of the reserve 
stock room at the store applies with equal or greater force to 
the warehouse itself, which is maintained solely for the pur¬ 
pose of storing surplus commodities, or those which it is unde¬ 
sirable to keep in the store itself. 


Form 119-250 Books-9-21 

No. B Date --- 

To Reserve Stock Room 

Please deliver to - ———- Dept. 

QUANTITY SIZE STYLE DESCRIPTION 

















































ORIGINAL ( Signature ) 

PARAGON (TRADE MARK) 

RE-ISSUED PAT. NO 12624. MAR. 26, ‘07 — MFD. BY AM. SALES BOOK CO. LTD. ELMIRA. N.Y. 


Fig. 1C—Requisition form. 


Warehouse Receiving and Recording.—The shipment, 

when received at the warehouse either by car, truck, or hand, 
is placed on the receiving platform and recorded in the same 
manner as that in the store receiving room, with the excep- 


























STORING 


85 


tion that this receiving sheet and all other forms are marked 
at the top “Warehouse.” It is also suggested that a different 
color be used for these forms. After the merchandise is prop¬ 
erly entered, it is then placed on the elevator and carefully 
stored on the floor designated for its use. The allotment of 
space must be planned out according to the size of the ware¬ 
house and the merchandise handled. 

Invoices of warehouse merchandise are priced and signed by 
the buyer, finally being sent to the warehouse office. 

The receiving clerk at the warehouse has a rack for invoices 
received, and upon the receipt of the merchandise he will 
withdraw the invoice. A rotating number can be used which is 
distinguished from that used at the store by inserting “W” 
before the number. With this number the invoice and receiv¬ 
ing record may be stamped. On his sheet is recorded the same 
number, together with the name and address of the manufac¬ 
turer, how much merchandise is received and the total cost. 

The original copy of this record should be detached from the 
book each night and sent, with bills attached, to the auditing 
department, where the total will be taken off by the person 
handling insurance, so that it may be adjusted daily to meet 
the changing valuation. 

Trucks are usually assigned by the delivery department for 
warehouse w T ork only, and these trucks report in the morning 
to the warehouse head for the assignment of the day’s work. 

Handling of Warehouse Merchandise.—Warehouse mer¬ 
chandise may be withdrawn for direct delivery to customers, 
or to be put in forward stock at the store. 

Upon the purchase of furniture or merchandise which is in 
the warehouse, the salesperson makes out the sales check in 
the regular way and the withdrawal form is made out and 
signed by the buyer or assistant buyer. The original dupli¬ 
cate withdrawal slip should be sent to the warehouse, while 
the triplicate is held in the selling department as its record. 
When the merchandise is packed and loaded on the delivery 
truck, the original shipping ticket with part of sales check 
attached is kept in the warehouse office. The duplicate is sent 
to the audit department as a sales record and for insurance 
purposes. 


THE MERCHANTS’ MANUAL 


When merchandise is withdrawn from the warehouse to be 
put in forward stock, the same withdrawal form is made out 
by the department, and signed by the buyer or assistant re¬ 
quiring the merchandise. This merchandise is brought in 
through the receiving platform and the duplicate of the with¬ 
drawal slip acts as a memo bill which is given a warehouse 
number. After the merchandise is checked as though it were 
new incoming merchandise, the duplicate withdrawal slip is 
sent to the audit department, where the proper record for 
insurance purposes is made. 


CHAPTER VIII 


PACKING AND SHIPPING 

Almost every store, whether large or small, has practically 
the same problems in its packing for delivery and also packing 
for “take-withs.” The merchandise must be conveyed from 
the counters as soon as sold, and it must be protected at every 
point from rough handling as well as from theft and uninten¬ 
tional mistakes. 

COLLECTION OF PARCELS 

As soon as a store reaches a certain size, hand methods of 
collecting parcels for delivery must give way to some form 
of conveyor system. The point at which this will be necessary 
is determined by the type of goods sold and the layout of the 
store. 

Mechanical Conveyors.—Whether conveyor belts, eleva¬ 
tors, spiral chutes, pneumatic tubes, or other devices are used 
for conveying the parcels depends on the location of the 
delivery room, the system of wrapping employed, the physical 
layout of the various departments, etc. In many cases several 
types of conveyors are used in the same store to meet the 
special conditions arising: 

1. Gravity Roller Conveyors. The gravity roller conveyor 
is chiefly adapted to industrial establishments where heavy 
boxes, barrels, etc., must be moved. It can be applied to the 
store only under special conditions and is particularly feasible 
in receiving rooms, warehouses, etc. While a grade of 2% 
per cent can be used, it is advisable to have the grade at least 
4 per cent. 

2. The Belt Conveyor. The belt conveyor is the ordinary 
system of mechanical parcel carrier used in the larger stores. 
It does away with all congestion of aisles by trucks and frees 
the counters of accumulations of parcels during rush hours. 

87 




88 


THE MERCHANTS’ MANUAL 


As the larger quantity of packages comes from the first 
floor and the basement, it is the usual practice to have parcel 
collecting conveyors installed. Packages can be dropped 
through small chutes on to the moving belt from first floor 
wrapping desks, and thence conveyed direct to the delivery 
department. 

3. The Spiral Chute. The spiral chute is ordinarily used 
for connecting upper floors with the basement conveyors. 
The simplest form is a single blade type running from the 
top of the store to the bottom. A double bladed type is often 
used, one blade for charges; the other for paids and C. 0. D/s. 
Marshall Field & Company use double blades for this purpose. 

4. Special Devices. In some cases, as previously indicated, 
it is necessary to install special mechanical equipment for 
conveying packages. Thus the Denholm and McKay Com¬ 
pany of Worcester, Mass., has its delivery department located 
on the third floor rear of the store, due to the store’s being 
located against a steep hill. A finger-type of continuously 
moving elevator has been installed which picks up packages 
from the various floors and discharges them at the third floor 
on to a belt conveyor which takes them to the delivery bins on 
the other side of the store. 

Central Wrap.—The movement for efficient operation of 
retail stores has found one outlet in the central wrap system, 
that is, a system of belt conveyors which take the merchandise 
as sold to central wrap departments where trained wrappers 
speed up the wrapping process a great deal. For example, the 
Jordan Marsh Company of Boston with a reduction of 73 
per cent in the wrapping force is able to wrap more packages 
than previous to the installation of the central wrapping 
system. 

N. Snellenburg and Company of Philadelphia operate a 
central wrap system for all “send” packages from the main 
floor. “Take with” packages are handled by the old wrapping 
stations, the idea being that service to the waiting customer 
can be speeded up in this way. Merchandise to be delivered 
is conveyed to the central wrap station in canvas bags. Twelve 
wrappers handle from 200 to 400 parcels apiece during the 


PACKING AND SHIPPING 89 

day. Each wrapper is furnished with twine, paper, boxes, 
mailing tubes, etc. 

Silks and other yard goods are sent over the conveyor in 
specially constructed portfolios, so constructed that the mer¬ 
chandise cannot become wrinkled or crushed. 

The methods which the Jordan Marsh Company has worked 
out in its central wrap department deserve special considera¬ 
tion as they may well serve as a model for efficient perform¬ 
ance. 

Salespersons place goods to be sent in green bags, which 
are collected every twenty minutes. The collector must sign 
a card at each station showing that the collection has been 
made. They are then taken to the rear in trucks and put 
down a special chute, which places them on a belt conveyor 
leading to the wrapping section. They are then distributed 
by girls to the parcel wrappers’ bins. Parcels are divided into 
small parcels, Class A, and large parcels, Class B. 

The Bonus System.—Parcel wrappers have been trained 
thoroughly in all packing requirements, and given an incentive 
for excellent workmanship by a bonus system. No parcel 
wrapper is obliged to leave her seat, as all supplies are fur¬ 
nished. The ordinary size of wrapping paper is laid on the 
wrapping table and she packs right on it. Other sizes are 
arranged in shelves underneath the packing table. 

The feature of the department is the bonus system. A 
bonus tag is slipped under the string of the completed parcel. 
An inspector takes the package from the finished tray and 
removes the bonus tag if the work has been correctly done. 
The parcel then is thrown on the conveyor and goes to the 
delivery department. 

The bonus rate is as follows: 

Class A. Small bundles. 

200 per day, 15 cents bonus 
250 per day, 35 cents bonus 
300 per day, 50 cents bonus 

Class B. Large bundles. 

120 per day, 15 cents bonus 
150 per day, 35 cents bonus 
175 per day, 50 cents bonus 


90 


THE MERCHANTS’ MANUAL 


If the number of bundles exceeds the bonus amount, the 
balance is carried over and added to the next day’s total. 
That is, if a girl wraps 275 bundles she receives a bonus for 
250 and 25 are credited towards the next day’s work. Fifty 
cents is deducted from the bonus for each error caused by 
failure to compare merchandise with the sales check for 
quantity and price. 

The bags to be wrapped are counted hourly by the inspec¬ 
tor, and their number furnishes an index of the amount of 
help required. In addition to the parcel wrappers, the per¬ 
sonnel consists of one girl to distribute work, a girl to give 
out supplies, a girl to attend to errors, a girl to attend to 
bags, and an inspector and assistant. These workers are given 
a bonus of 25 cents a day if their work is perfect. 

Every hour parcel wrappers are given a rest period of five 
minutes, no matter how heavy the rush of work. They report 
for work at 11.30 and are ordinarily through their work at 
5.30, it very seldom being necessary for them to remain their 
full quota of working hours. 

Authorization of Charges.—The authorization system is 
usually designed to fit the special case and facilitate as far 
as possible the movement of parcels. It depends on the per¬ 
centage of charge to cash sales, and other factors. This sub¬ 
ject is taken up more fully in the chapter on Credits and 
Collections. In some stores all charge “sends” are authorized 
in the delivery room. At Arnold, Constable and Company of 
New York, the central wrap, charge-send authorizing and 
pneumatic tube central desk for handling the take and send 
authorizing (as well as for cash) are combined. The pneu¬ 
matic central desk is here located in the delivery room. 

THE DELIVERY ROOM 

Routing.—After being wrapped and authorized, parcels 
come by conveyor to the delivery room where they are sorted 
according to route numbers and placed in sheet writers’ or 
drivers’ bins. In some stores a system of loose-leaf records 
has supplanted the sheet writer. 

Speed in routing is dependent on the ability of the route 


PACKING AND SHIPPING 


91 


clerk to coordinate his memory and his hand. Routing can 
be learned only by experience and for this reason wagon boys 
who have been on all the routes are the best to break in. As 
an illustration of how expert sorters can become, three men 
at the Stix, Baer and Fuller Company’s in St. Louis, routed 
17,000 packages in one day. 

In ordinary procedure, as fast as a package has been sorted, 
it is entered on the route slip, and then put in the delivery 
bin as marked. 

Delivery Room Layout.—Figure 14 shows the modern lay¬ 
out of the J. L. Hudson Company’s (Detroit) package dis¬ 
tributing station. Everything is arranged for expeditious 
handling of merchandise into the drivers’ bins. 

Modern practice is to build drivers’ bins of metal wire mesh 
which permits the delivery superintendent to watch all pro¬ 
ceedings at once. Sheet-writers’ bins are often built with 
upper and lower compartments for different types of mer¬ 
chandise, and fitted with metal desks for recording packages 
on sheets. 

The bins of the Rosenbaum Company, Pittsburgh, are of 
lattice wire construction. Each driver is given a key which 
will open his bin only. When he starts to load up for delivery, 
he pulls out the wheel truck and puts fragile articles on top 
of more substantial packages. More bulky articles, such as 
large rugs, furniture, etc., are handled in a slightly different 
fashion. Instead of the article itself a ticket is put in the 
bin. The driver thereupon goes to the warehouse, or wherever 
the article is, and receives it in return for the ticket. 

Outside each driver’s bin in the delivery department of the 
Stix, Baer and Fuller Company is what is known as the 
driver’s “layout bin.” It consists of five 1-foot shelves, 12 
feet long and 18 inches above each other. Five of these shelves 
make up the cubic contents of the ordinary delivery truck. 
It is possible, therefore, for the driver to arrange his packages 
prior to loading, which makes a material difference in speed of 
delivery. 

“Distant” Delivery.—One of the most interesting of the 
recent developments in store operating efficiency is the estab¬ 
lishment of special delivery departments outside of the main 


THE MERCHANTS’ MANUAL 



Fig. 14. Package distributing station of the J. L. Hudson Company, Detroit, Mich. 















































































































































































































PACKING AND SHIPPING 


93 


store building. The J. L. Hudson Company, Detroit, one of 
the first large stores to put this idea into operation, has the 
actual delivery department half a mile away from the store 
and in combination with the garage. 

Stores are being forced to adopt the outside delivery plan 
because of the great value of the basement for selling space, 
congestion in streets surrounding the store, etc. The State 
Street stores in Chicago have this problem to meet, and ship 
all their goods in large cases to various distributing points, 
from which they are sent out in small deliveries to the indi¬ 
vidual customers. 

Special heavy-duty trucks remove packages from the store 
to the distributing station at frequent intervals. Those of 
the Rosenbaum Company make a trip every 15 minutes and 
take each trip all goods which have accumulated so that a 
very small space in the main store suffices for parcel storage 
space. 

CONTAINERS 

Policies with regard to packing merchandise differ widely, 
ranging from the highly efficient to the very inefficient. Inas¬ 
much as material used for wrapping articles is in the majority 
of instances a dead expense to the store, economy and super¬ 
vision of packers are especially necessary. 

A great deal of loss comes from the employment of untrained 
packers. A new wrapper should be taught to wrap each kind 
of merchandise in the proper fashion. She should be able to 
judge at a glance the size of paper required to wrap the goods, 
and if a box is required, the size of the box. As it is, much 
twine, much paper, and much excelsior are needlessly wasted. 

Proper supervision of packing is a more fruitful means of 
real economy than a bonus for return of containers. But it 
is necessary to strike at the root of the evil rather than 
employ half-way methods. The fundamental difficulty lies 
with the packer or wrapper and her proper supervision. Some 
stores have tried the method of cutting twine into lengths, for 
example, to prevent wastage, but the result has been that the 
wrapper uses the size too large to make sure of having enough. 


94 


THE MERCHANTS ' MANUAL 


Gummed Tape Versus Twine.—Gummed tape has grown 
rapidly in popularity due to its economy and the trim 
appearance presented by the package when completed. The 
machine can be set at any desired length and a slight pres¬ 
sure on a handle moistens, cuts and ejects the tape. It is 
claimed that gummed tape gives far greater speed of wrapping. 

The Fiber Container.—The use of wooden boxes is gradu¬ 
ally being discarded in favor of the fiber container for use in 
packing fragile articles. A small quantity of excelsior may be 
placed in the bottom and the driver required to bring back 
the container for use another time. 

For such articles as tumblers, plates, etc., partitioned con¬ 
tainers, somewhat in the nature of egg crates, are used. 

Salvage.—Some stores, notably the Jordan Marsh Com¬ 
pany, use a system of salvaging packing material which has 
been sent to the store protecting manufacturers’ shipments. 
This system, started as a war-time economy arrangement, has 
been continued since. 

Every piece of packing material is sent to the salvage sec¬ 
tion, examined and sorted. It then serves for rough or bulky 
merchandise. If paper is soiled or torn too badly, it is put 
in a macerating machine and then used as a substitute for 
excelsior. 

Packing Fragile Articles.—While it is almost always 
cheaper to overpack than to run the risk of breaking an arti¬ 
cle, careful supervision will do away with the too frequent 
occurrences of this sort. 

Packers should use liberally labels provided for fragile 
articles such as “Glass” and “Handle with Care.” A driver 
may handle them carelessly if they are not properly marked. 

China and glassware can be packed in baskets, which can 
be returned to the store after delivery of contents. 0 

Marking.—Careful elimination of errors in names and 
addresses on saleschecks is essential for efficient delivery. 
As each error in making out sales checks costs the store 
approximately 25 cents, any plan to reduce errors is valuable. 

Best and Company have adopted the plan of supplying 
gummed stickers to charge customers, containing the cus¬ 
tomer’s name and address. John Wanamaker, Philadelphia, 


PACKING AND SHIPPING 


95 


uses the same idea. The purpose is to reduce selling costs to 
the store and reduce delivery expenses through elimination of 
errors. 


PACKING FOR OUT-OF-TOWN DELIVERY 

Many stores, particularly those with large mail order de¬ 
partments, find it necessary to send articles by freight, ex¬ 
press, parcel post, or motor truck, which require special 
packing and special precautions. During the summer, espe¬ 
cially, many department stores deliver at distances too far 
for anything but rail shipments. 

Safety of Goods.—Any expense put into a package should 
add to the safe carriage of the goods contained therein or to 
the attractiveness of the shipment, and thereby serve as an 
advertisement. Otherwise, it is money thrown away. 

The most essential consideration in packing for rail ship¬ 
ment is the safety of the goods. As long as the goods are 
delivered through the store’s own employees, the store has 
control, but when the articles are entrusted to common car¬ 
riers, much rougher treatment may be expected. Although it 
is possible to collect from the carrier for losses or damage sus¬ 
tained in transit, from the customer’s point of view prompt 
and safe delivery is. the most important consideration. 

It is only fair to the carriers to pack merchandise so that it 
will arrive at its destination safely with ordinary care and 
handling. It should also be borne in mind that shipments 
should be so packed as to prevent the contents from becoming 
damaged by other merchandise which may be loaded into the 
same car, or vice versa. 

Proper Classification.—To determine the proper style of 
packing necessary to obtain the lowest rate, it is necessary to 
secure a copy of the classification governing the movement 
of freight. Various rates are provided for various methods of 
packing, and it may be cheaper to provide better packing and 
secure the lower rate. 

Since packers are not acquainted with rules for freight 
classification it is necessary to instruct them and see that in¬ 
structions are followed to the letter. This is particularly 
important in a department store where a great many individ- 


9G 


THE MERCHANTS’ MANUAL 


ual orders are made up of various kinds of merchandise. 
Packers, when left to their own initiative, frequently specify 
the article which makes the first impression on them. Many 
articles of the same general description take different rates. 
For example, rates on different classes of furniture differ 
widely. 

Stores will find that one of the important basic principles 
in rate construction is the bulk. Ordinarily, therefore, by re¬ 
ducing bulk as much as possible, a lower rate is secured. For 
example, baby carriages when shipped set up with the wheels 
on are subject to the highest rate applicable to that com¬ 
modity, which is three times the first-class rate. When they 
are shipped with the wheels off or completely drawn into the 
body, the bulk is reduced and the rate is only one and one- 
half times the first-class rate. In some instances the bulk 
can be still further reduced by collapsing or folding flat and 
the rate would be only second class. 

Another element which helps to determine the class to which 
the particular commodity belongs is the amount of risk which 
the carriers run in transporting it. Different rates have there¬ 
fore been provided for different methods of packing. It is to 
the advantage of the shipper to pack his merchandise so as to 
reduce the risk to the minimum. 

Articles of More than One Class.—The person in charge 
of out-of-town deliveries should always remember that when 
articles of more than one class are packed together in one 
container, the rate which will be applied by the carrier will be 
the highest rate applicable to the highest class commodity in 
the container. It is generally advisable, therefore, to pack 
the different classes separately unless the additional cost of 
packing in this manner is greater than the loss suffered by 
reason of a higher freight rate. 

Shipments packed so as to secure the lowest rate in one ter¬ 
ritory may require an entirely different method of packing to 
secure the lowest rate in another territory. Where the rate 
differs for certain styles of packing, the store should first 
determine what style will provide the lowest rate for the com¬ 
bination. This can generally be secured by packing so as to 
secure the lowest rate for the longest part of the haul. 


PACKING AND SHIPPING 


97 


Comparative Rates.—A great deal of money is lost by 
retail stores through failure to take into consideration the 
comparative rates of freight, express and parcel post. Freight 
is cheaper than express as far as very heavy pieces are con¬ 
cerned. Parcel post is cheaper than express up to certain 
weights and in certain zones. 

Taken as a whole, express will probably prove the cheapest 
method for the majority of packages which the department 
store sends beyond the range of its own delivery system. This 
is true only as a generality. If New York is taken as the 
point of shipment, it is cheaper to send three pounds or less to 
any point in the United States by parcel post than by express. 
Above this weight, destination is the predominant factor. 

The advantage of the express company’s service lies in the 
fact that it has both a pick-up and a delivery service in¬ 
cluded in the rates. Parcel post as a delivery medium is 
treated at length in the following chapter. 

Export Packing.—The essence of export packing and 
shipment is attention to details. The weight of lumber used, 
the size of packed pieces, marking whether by hand, brush, or 
stencil, color of ink to be used, the number of sides upon which 
each packed piece should be marked—all these details are of 
importance, particularly in the South American trade. 

Pilferage is not uncommon, whether goods are shipped by 
ocean freight or by registered mail. Parcel post affords more 
opportunity for claims, while shipments by express are more 
likely to arrive untampered with. 


7 


CHAPTER IX 


DELIVERIES 

Delivery service, however managed, is one of the most ex¬ 
pensive services rendered by the store to the customer. 
Efforts have been made and are constantly being made to cut 
delivery cost. The chain organizations have made it part of 
their policy to eliminate deliveries entirely. Under the stimu¬ 
lation of increasing delivery costs, Wm. Filene’s Sons Com¬ 
pany of Boston tried putting a charge of 10 cents on each 
delivery. This test was watched with interest by retailers 
throughout the country. During the year the system was in 
effect, parcel deliveries dropped off from 400,000 to 185,000 
and cost per package was 21 cents against 10 cents the year 
before. The company abandoned the plan after one year’s 
trial, not because it had proved financially unsound, but be¬ 
cause the store’s customers did not like it. They had been 
accustomed to regarding free delivery as a store service and 
showed plainly they preferred the cost of delivery included in 
the price of merchandise. A charge is still made, however, 
for delivery in the basement store. 

It is also the tendency of retail stores to prepay freight, 
express, and parcel post charges on merchandise to be delivered 
to customers outside of the regular delivery zone. Most of 
the New York stores, for example, are willing to send mer¬ 
chandise acceptable as parcel post to any part of the United 
States. . General policy on freight and express charges seems 
to be to prepay these also, but this fact is not advertised to 
the public. 

Each sale is given careful consideration by the department 
manager and if the charge for transportation is reasonable, he 
ordinarily has the authority to approve it. Some stores make 
a policy of advertising the fact that they will not pay freight 

98 


DELIVERIES 


99 


and express charges on merchandise which is sold at an un¬ 
usually low price during special sales. 

The question of prepaying delivery charges beyond a cer¬ 
tain range is more or less a community matter. It is impor¬ 
tant to ascertain the policy of competitors in this respect. If 
all the stores followed a uniform procedure, much of the diffi¬ 
culty would be eliminated. 

The delivery department is ordinarily considered as non¬ 
productive, yet, when well organized, equipped, and managed, 
it is responsible for a certain share of the store’s business 
through accumulation of good will. When poorly organized, 
inadequately equipped, and carelessly managed it is frequently 
a source of annoyance to the customer which is reflected in her 
attitude towards the store. 

There are three essential factors in the delivery depart¬ 
ment: the system, the personnel and the equipment. Each 
one of these factors depends on the others for its excellence. 

SYSTEM 

The system should be formulated with the idea of furnish¬ 
ing service in accordance with the needs and customs of the 
community. This requires a careful survey of existing con¬ 
ditions with this purpose of furnishing the most efficient serv¬ 
ice possible, both for the customer and for the store. 

Errors cannot be entirely eliminated but they may be re¬ 
duced to a minimum, and remedial measures should be pro¬ 
vided to mitigate errors when they are made. The system 
should be arranged in such a way that it may meet peak de¬ 
mands without confusion and during slack periods operate as 
economically as possible. 

Analysis of Delivery Problem.—A good system of de¬ 
livery is obtained only by a careful study of the facts, includ¬ 
ing the different advantages of various methods of delivery, 
careful layout of routes, and an accurate and complete method 
of cost accounting. The following factors enter into the retail 
delivery problem: 

1, The location of the store. The distance of the store from 


100 


THE MERCHANTS' MANUAL 


the consumer is a primary factor in the delivery problem. 
The farther out the suburbs extend, the more complicated and 
the more expensive does the delivery problem become. A 
store selling goods within a radius of 50 miles, and this is 
not an extravagant estimate, has an area of approximately 
7,500 square miles included in the market delivery range. The 
location of the store also has a definite bearing on the choice 
of equipment, depending on whether it is located in a con¬ 
gested district, whether there is ample loading space, city 
traffic regulations, etc. 

2. The volume of business. The small store with widely 
scattered deliveries over a large area is at a disadvantage in 
maintaining its own delivery equipment. 

3. Working conditions. The character of the roads, the 
mileage demanded of each vehicle on its route, stops per mile, 
traffic congestion, etc., all have an effect on the type of de¬ 
livery equipment required. 

4. Available delivery service. Old equipment should not be 
discarded recklessly without being certain that a supplemen¬ 
tary service would not fit the necessities exactly as well with 
the added advantage of costing less. It is also advisable to 
consider the opportunities offered by cooperative delivery, 
either entirely or in part, and perhaps the use of parcel post 
delivery. 

5. Cost of delivery. Delivery cost involves a discussion of 
what items should be included in making up the total cost per 
package, and also what it costs to deliver packages from the 
different departments. Obviously a package charge of 10 
cents would be small for a piece of furniture and large for a 
parcel containing ribbon. 

Methods of Delivery.—For many years, of course, the 
horse was the standard delivery motive power. His useful¬ 
ness was unchallenged until the coming of the truck propelled 
by gasoline or by electricity. In many cases the horse is still 
used where stops are comparatively close together and length 
of time necessary to spend on the road between the. store and 
the delivery zone short. 

In addition to the horse and the power truck, a motorcycle 



DELIVERIES 


101 


with side-car attachment is sometimes utilized. Lastly, there 
is the possibility of delivery by mail. 

The Horse.—The geographical limit of a horse-drawn 
vehicle is marked. Beyond a range of ten miles the truck is 
undoubtedly superior, and it is commonly agreed that the 
horse is economical only over a route covering about five miles. 

Even where the horse is as cheap a medium of delivery as 
the truck, the inconveniences attendant on keeping horses in 
cities are obstacles which deserve consideration. Difficulty 
in securing quarters near the store for stables, expense of 
securing feed, interest, upkeep, and replacement, extra horses 
for emergency purposes, are all necessary as factors influencing 
a decision. 

The Electric Truck.—The electric vehicle is proving satis¬ 
factory for deliveries within a range of twenty-five miles. 
Fourteen department stores in New York City are using them 
effectively. Their cleanliness, simplicity of operation, and 
economy in frequent stop service, recommend them for use 
where service facilities are available. 

The Gasoline Truck.—The gasoline propelled vehicle is 
primarily a long haul delivery proposition. For all-around 
purposes as well it is best owing to the ability to use it at need 
for any type of road service. Beyond the twenty-five-mile 
zone, the gasoline vehicle is almost entirely used, while within 
that zone it has a large part of the use as well. The individual 
circumstances will determine whether the gasoline vehicle, the 
electric truck, or the horse, is the proper delivery medium. 

Combined Delivery Service.—Many department stores 
have solved their delivery problems, at least temporarily, by 
the use of horses for local delivery, electrics for suburban, 
and gasoline trucks for out-of-town customers. This calls for 
a store with a comparatively large volume of business to per¬ 
mit efficient routing. 

For the small store called upon to do its own delivering, a 
gasoline truck would probably offer the best solution. 

As to comparative costs of horse, electric and gasoline 
vehicle, the circumstances differ so radically in the individual 
case as to make computation difficult. Following, however, are 
figures compiled by the Massachusetts Institute of Tech- 


102 


THE MERCHANTS' MANUAL 


nology. In all cases the distance to the delivery zone is four 
miles, and two trips made daily. 



Electric 
1,000 lb. 

Gasoline 
1,000 lb. 

One Horse 
Wagon 

Miles per day. 

37 

39 

29 

Cost per day. 

$8.60 

$10.40 

$6.50 

Cost per mile. 

.23 

.27 

.23 

No. of deliveries. 

128 

138 

78 

Cost per delivery. 

0.067 

0.075 

0.085 



These statistics would seem to show that the four-mile 
range was best suited for the electric. The range was too far 
for the horse and too short for the best efficiency of the gaso¬ 
line truck. 

Routing.—Routing of deliveries is essential to an efficient 
system. The common method of allowing a route to grow 
until the driver fails to cover it satisfactorily and then divid¬ 
ing it up and establishing a new route is decidedly bad prac¬ 
tice. The route usually breaks down at a time when efficiency 
is particularly needed, such as at Christmas. Breaking in a 
new driver always causes a certain amount of delay and con¬ 
fusion. It also causes confusion in the sorting bins. 

One method of routing which has proved satisfactory is to 
cut up delivery territory into as many sections as it is ex¬ 
pected there will be routes at the busiest time of year. In dull 
seasons one route may cover two or even three sections. As 
deliveries increase, the number of routes increase but the 
sections remain the same. 

As delivery conditions are constantly changing, records of 
routes should be kept to avoid overwork for one driver and 
underwork for another. The number of packages carried by 
areas of similar sizes, hours required to cover various routes, 
etc., serve to help in adjustment. In making a route study, 
the following points should be considered: 

1. Mileage. 

2. Stops. 

3. Packages. 














DELIVERIES 


103 


4. Character of roadway. 

5. Per cent of buildings by classes, that is, apartments, 
single houses, etc. 

Cost of Delivery.—When one store says it costs 10 cents 
to deliver a parcel, and another store says it costs 15 cents, 
in order to compare the two it is necessary to know what 
is included in this cost. As a practical illustration of the 
difficulty in finding out exactly what delivery costs, the results 


Table I.—Delivery Cost of 33 Stores 


Store 

No. 

Class 

Location 

Use Stand¬ 
ardized 
Expense 
Classifica¬ 
tion 

Deliv¬ 

ery 

Cost 

Per 

Pack¬ 

age 

Remarks 

1 

E 

California 

No 

Cents 

12.5 

Use parcel delivery service. Furni- 

2 

G 

California. 

Partially 

15.3 

ture delivery costs $1. 

3 

H 

California 

Rartially 

14 

Do not charge delivery department 

4 

H 

California 

No 

15 

with rent, light and heat. 

Use parcel delivery service. 

5 

I 

California. 

Partially 

16 

6 

E 

Georgia 

No 

10-15 

Use parcel delivery service. 

7 

H 

Indiana 

Partially 

12 

8 

E 

Indiana 

Partially 

11.6 


9 

G 

Iowa 

No 

14 

Figure cost per package from oper- 

10 

F 

Maryland 

No 

6.2-.08 

ating expense. 

Do not charge rent. 

11 

H 

Maryland. 

Partially 

18 

Furniture delivery costs 32 cents. 

12 

I 

Massachusetts 

No 

24 

All deliveries handled by special ex- 

13 

I 

Massachusetts 

Partially 

30 

press service. 

14 

J 

Massachusetts 

Yes 

19.8 

15 

G 

Massachusetts 

No 

11 

Use outside delivery service. Cost 

16 

J 

Michigan 

Yes 

16.9 

8.5 of 1 per cent of volume of 

17 

H 

Minnesota 

Partially 

.09 

business. 

Excluding furniture delivery. 

18 

H 

Missouri 

Partially 

15.5 

19 

E 

Missouri 

Partially 

10.9 


20 

G 

Nebraska 

Partially 

16 


21 

F 

Nebraska 

No 

13.6 

Do not charge rent or overhead to 

22 

H 

New Jersey 

Partially 

13 

delivery department. 

23 

E 

New York 

Partially 

16.8 

All expenses from counter to cus- 

24 

F 

Ohio 

No 

12.8 

tomers, all departments charged 

25 

F 

Ohio 

Partially 

.07-.09 

proportionately. 

26 

G 

Ohio 

No 

15 


27 

J 

Ohio 

Partially 

14.1 


28 

J 

Ohio 

Yes 

17.5 

Furniture delivery costs $1.05. 

29 

E 

Rhode Island 

Yes 

29 

30 

F 

Rhode Island 

No 

14.2 

Include all expenses after package 

31 

G 

Texas 

Yes 

.05.5 

leaves department. 

32 

E 

Utah 

No 

13.8 


33 

E 

Washington 

No 

14.2 



Classification 

Annual Business 

Classification 

Annual Business 

Class E. 

$1,000,000—$2,000,000 

Class H. 

$5,000,000—$ 7,500,000 

Class F. 

2,000,000— 3,500,000 

Class I. 

7,500,000— 10,000,000 

Class G. 

3,500,000— 5,000,000 

Class J. 

10,000,000— and over 






























104 


THE MERCHANTS MANUAL 


obtained by the National Retail Dry Goods Association from 
a questionnaire to members is interesting. 

Table I shows the delivery cost of each of the thirty- 
three stores. Stores are classified according to the volume of 
business annually. While the range is from 5.5 cents to 30 
cents, fifteen of the stores average from 12 to 15 cents. 

The story is not complete without examining Fig. 15, which 
sets forth the items on which the various delivery costs were 
reckoned. Store 31, which reckoned its delivery cost at 5.5 
cents, omits such items as shipping department wages, pack¬ 
ing supplies, depreciation on vehicles, and damage and loss 
on parcels. Stores 29 and 13 included almost every item. 


CHART SHOWING 

ITEMS INCLUDED UNDER DELIVERY EXPENSE 

Store 

Number 

Package 

Collector’s Wages 

I Shipping Dept, 

Wages 

1 Delivery Dept, 

Wages 

Freight & Express^ 

Out and Return 

Postage and 

Parcels 

Special 

Messengers 

C.O.D. 

Collection Charges 

Packing 

Supplies 

Gasoline, Oil 
and Grease 

Electric Current 

Depreciation on 
Vehicles Liability 

Garage Rental 
and Interest 

_ . Repairs and 
Replacements to Shipping 
Room Fixtures 

Delivery Service 
Purchased 

Damage and Loss 
on Packages 

Uniforms 

Bonds-Surety 
and Fidelity 

Repairs to 

Equipment 

Unclassified 

1 


V/ 



NX 



X 






vx 






2 


V/ 

X 

NX 


vX 


X 

NX 


X 

VX 




v o0’l 


X 


3 


X 

X 

V/ 

NX 

\X 


X 

VX 

\X 

X 

NX 

V-" 

X 

v/ 

NX 


X 


4 


NX 

NX 

NX 

\x 

NX 


X 

\X 

NX 

\X 

NX 

vx 

NX 

VX 

X 

NX* 

vx 

vx 




XX 

X 



NX 






V/ 



■x 



X 


31 



NX 



X 



vx 



NX 






X 


32 

NX 

X 

NX 

NX 

VX 

NX 


\X 

X 


vx 

\X 

vx 


VX 


X 

X 

X 

33 


NX 

X 


nX 

vX 

NX 

NX 



X 

VX 



X 


X 

X 

X 


Fig. 15. — Items on which delivery costs were reckoned. 

The results of this questionnaire show that the majority 
of storey do not know exactly what their deliveries are costing 
them. Stores that omit such items as rental in estimating 
delivery charges in appearance deliver more cheaply, yet it is 
also evident that some other department must bear the ex¬ 
pense which normally should be attributed to the delivery 
department. 

A Standard Cost System. —To obtain accurate statistics 
from one store which can be compared with those of another 
store a standard cost system is necessary. Little in the way 
of dependable research can be made without such a system. 

























































DELIVERIES 


105 


The Traffic Group of the National Retail Dry Goods Asso¬ 
ciation has made the following arrangement for a standard 
delivery cost system: 


Payroll 

Interior 

30— A Management and Assistants 
B Inside Division Store 

C Inside Station 
D Inside Furniture Delivery 
Exterior 

A Management and Assistants 
B Outside Division Drivers 
C Outside Division Helpers 
D Garage Watchman 
E Auto Greasers 
F Tire Repair Mechanics 
G Auto Mechanics 
H Washers 
I Office—Garage 
Exterior 

31— A Overtime 
B Bonus 

C Vacations 
D Supper 

Interior 

32— A Overtime 
B Vacations 

C Supper Money 

Fixtures—depreciation 

—REPAIRS 

Interior 

61—A Office Equipment 

C Delivery Room Equipment 
—Station 

D Delivery Room Equipment 
—Furniture 

E Delivery Room Equipment 
—Store 

Exterior 

61—A Office Equipment 
B Garage Equipment 

Occupancy 

Interior 

37 —A Rent Store 
B Rent Station 
C Rent Garage 
Exterior 

37—B Rent Station 
C Rent Garage 
D Rent Furniture Delivery 
E Rent and Taxes 


Supply Office 
Interior 

46—A Route Sheets Printed Forms 
B Stationery—Pens—Pencils 
C Trade Papers 
D Postage 

Exterior 

46— A Printed Forms 

B Stationery—Pens—Pencils 
C Trade Papers 

Garage Supplies 
Exterior 

47— A Gasoline 
B Oils 

C Grease 

D Alcohol or Non-freezing 
Substitute 

E Cleaning Materials 
F Tools and Tool Repairs 

Heat, Light and Power 
Interior 

38—A Store 

Exterior 

38—B Stations or Distributing De¬ 
pots 
C Garage 

Car Supplies 
Exterior 

48— A Batteries for Lighting only 

or Acetylene Gas Tanks 
B Recording Instruments and 
Supplies 
C Generators 
D Casings 
E Casing Repairs 
F Tubes 
G Tube Repairs 
H Skid Chains 
I Rims, Felloe Bands, etc. 

J Tire Changing Tools 
K Fenders 
L Windshields 
M Lamps and Horns 
N Seat Cushions, Curtains, etc. 
O Electric Current 
P Batteries—New and Re¬ 
paired 
Q Sundries 


106 


THE MERCHANTS’ MANUAL 


Vehicles—Depreciation 
•—Repairs 
Exterior 

60—A White 
B Dodge 
C Ford 
D Federal 
E Packard 
F G. M. C. 

G Outside Cars 
H Painting 
I Body Repairs 
J Trailers—Parts and Repairs 
K Depreciation 

L Interest on Equipment In¬ 
vestment 

M Mechanical Repairs 
Communication 
Interior 

62—A Postage 

B Telephone—Telegraph 
Unclassified 
Interior 

52—-A Bonds and Detectives 

B Damage and Loss on Pack¬ 
ages 

C Employees Discount 
D Advertising 
E Sundries 

F Parcel Post and Express 
Returns 

G Packing Material Costs 
H Store Insurance 
I General Insurance 
Exterior 

52—A Auto Hire 

B Messenger Service 
C Uniforms 

D Bonds and Detectives 
E Damage and Loss on Pack¬ 
ages 

F Employees Discount 
G Advertising 

H Furniture Pads—Covers, etc. 
I Tolls and Ferries 
J Sundries 
K Carfares 
L Garage Insurance 
M Car Insurance 
N Parcel Post Insurance 
O Licenses 
P Auto Insurance 
Q Garage Insurance 
R Drivers Insurance 
Summary 

Total Cost 
Less Credits 
Net Cost 

Parcel Delivery Cost 


Summary— {Continued) 

Cost Per Parcel 
Furniture Delivery Cost 
Cost Per Piece 
Special Delivery Cost 
Parcel Post Cost 
Express Cost 
Freight Cost 
% to Net Sales 

Number of Deliveries 
Parcel Delivery 
Furniture Delivery 
Special Delivery 
Parcel Post 
Freight 
Express 

Employees House Parcels 
Transfer Division 
Interior 
A Payroll 
B Rent 

C Light, Heat, Power 
D Supplies 
E Suppers 
F Parcel Collectors 
Horse-drawn Vehicles 
Exterior 

A Rent 
B Shoeing 
C Feed 

D Harness and Repairs 
E Wagon Repairs 
F Painting 
G Stable Supplies 
H Veterinary Service 
I Payroll 

J Light, Heat, Power 
Electric Vehicles 
Exterior 

A Rent 
B Payroll 

C Batteries and Repairs 
D Electric Current 
E Recording Instruments and 
Supplies 
F Casings 
G Casing Repairs 
H Tubes 
I Tube Repairs 
J Skid Chains 
K Rims, Felloe Bands, etc. 

L Fenders 
M Windshields 
N Lamps and Horns 
O Seat Cushions, Curtains, etc. 
P Motors and Repairs 
Q Painting 
R Body Repairs 
S Mechanical Repairs 


DELIVERIES 


107 


This is similar to that advocated by the International 
Delivery Men’s Association. 

(Note: The latter organization has recently been absorbed 
into the National Retail Dry Goods Association as an asso¬ 
ciated group and is known as the Retail Distribution Asso¬ 
ciation.) 

The foregoing schedule covers all factors which should be 
included as ordinary delivery expenses, both fixed and run¬ 
ning. It includes statement of what statistical summary 
should include, and miscellaneous expenses for horse and elec¬ 
tric vehicles. 

Cost Accounting Forms.—The Truck Owners Conference, 
Inc., of Chicago, sells what is known as the National Standard 
Truck Cost System, which gives in convenient shape a series 
of record forms on which delivery expenses may be entered. 
These forms are suited to either gasoline or electric trucks. 

Another system, devised by The Commercial Vehicle , is sold 
at cost by the U. P. C. Book Company, Inc., of New York 
City. 

Pro-rating Delivery Charges.—Next to advertising, de¬ 
livery charges in the ordinary store probably rank highest 
in overhead. Some method of pro-rating these charges on 
a rational basis instead of the arbitrary method now in use 
is highly advisable. 

According to the plan presented by Merrill C. Horine before 
the Metropolitan Group of the Controllers’ Congress of the 
National Retail Dry Goods Association, proper distribution 
of delivery charges is dependent on four different factors— 
the charges per pound, per cubic foot, per package and per 
delivery stop. The average of these four bases will give the 
amount to be charged each department per package. Rates 
should be subject to revision quarterly. 

Physical test in the shipping room of the average weight 
and size of each package for each department, taken for an 
average day, forms the basis for the necessary information. 
Figure 16 shows a record form suitable for recapitulating 
data. Total weight, total cubic feet, total packages, for each 
department are noted down. Pro rata deliveries are obtained 
by ascertaining the percentage of the total deliveries of each 


108 


THE MERCHANTS' MANUAL 


department to the total deliveries of the whole store. This 
is necessary because one delivery may include parcels from 
several departments. 

The rate per pound is found by dividing total delivery 
cost for the store by total number of pounds of all packages 
of all departments. Rate per cubic foot is determined by 
dividing total delivery cost by total packages of all depart¬ 
ments. Rate per delivery stop is found by dividing total 
delivery cost by total number of actual delivery stops. 

To find the charge for the individual department, it is neces¬ 
sary to multiply rate per pound by total pounds of each de- 


ITEM 

DEPARTMENT^/ 

A 

B 

C 

D 

E // X 

Y 

Z 

Total Weight 





// 



Total Cubic Ft. 





J! 



Total Packages 





{/ 




Pro Kata 
Deliv’ries 





t 




P* 

<V 

to 

Um 

a 

A 

o 

Lb.® - 4 





// 




Cu .Ft.® — 4 





1 




Package®.^ 





/ 




Deliv.®«| 




it 





Total,all chgs. 




11. 





Average 
all chgs. 




11 





Rate Per Package 




t 






Fig. 16.—Record form for recapitulating data. 


partment; rate per cubic foot by total cubic feet of each 
department; rate per package by total packages from each 
department; and rate per delivery stop by pro rated deliveries 
from each department. 

The total unit charges divided by four will give the average 
pro rata charges per day. 

Schedules.—The best speed in the delivery department is 
obtained by a careful system of schedules. Besides eliminat¬ 
ing congestion, it provides the customer with, knowledge as 
to when a certain article should be delivered. For example, 
the Houghton Dutton Company, of Boston, follow out the 






























DELIVERIES 


109 


policy of posting delivery schedules in various departments. 
See Fig. 17. 

By despatching vehicles at a certain time and holding to a 
definite schedule, the standard of performance in the entire 
delivery department is raised. 

Complaints.—The best record of the delivery department’s 
efficiency lies in the number of complaints which are received. 


CITY DELIVERIES AT 10.00 A. M. 


9.00 

A. M. 


9.30 

CHARLESTOWN 

WALTHAM 

EVERETT 


MEDFORD 

WATERTOWN 

MALDEN 


SOMERVILLE 

BELMONT 

ROXBURY 


DORCHESTER 

WAVERLEY 

JAMAICA 

PLAII> 

NEWTON 

10.00 

A. M. 


11. 


BROOKLINE 

BRIGHTON 

ALSTON 

CAMBRIDGE 


CHELSEA 

REVERE 


30 A.M. 

WINTHROP 
EAST BOSTON 


12.00 M. 

SOUTH BOSTON 


The following places are covered by Express, and leave at 12.00 noon, daily 


ATLANTIC 
DEDHAM 
GREENWOOD 
HYDE PARK 


LEXINGTON 

MATTAPAN 

MELROSE 

MILTON 


NEPONSET 

QUINCY 

ROSLINDALE 

STONEHAM 


WAKEFIELD 
WEST ROXBURY 
WINCHESTER 
WOBURN 


FREE DELIVERY TO ALL THE ABOVE PLACES. 

A DEPOSIT MUST BE MADE ON ALL C. O. D.’S SENT BY 
EXPRESS. 

Free delivery in New England Excepting House Furnishings, 
Groceries, and Patent Medicines. 

S2.50 Orders delivered FREE in New England, including Furniture; 
Excepting Sugar, Flour and Patent Medicines. This delivery 
means to the nearest Express, Freight or Post-Office as shipped 
optionally by us. 

Mark all extra Shipping instructions very carefully, and in case of 
any doubt call the Shipping Room. 

When calling the Shipping Room for freight, parcel post or express 
rates, the weight and description of the goods must be given. 

No Specials will be sent except by permission of the Superintendent. 
Jan. 23, 1919. This list cancels all previous ones. 


The form above is posted in various departments of the store for the 
guidance of employees so that they may give patrons correct information 
as to when merchandise purchased will be sent out. 

Fig. 17.—Delivery schedules. 

Under ordinary circumstances complaints are inevitable, but 
these should be kept at a minimum. To do this some system 
of records is necessary. According to one authority the com¬ 
plaint record should contain: 

1. Number of complaint. 

2. Date. 

3. Driver’s and helper’s names. 









110 


THE MERCHANTS’ MANUAL 


4. Nature of complaint. 

5. Amount of loss or damage. 

6. Corrective measures taken. 

7. Customer’s name and address. 

By analyzing these records monthly, the head of the de¬ 
partment will know how many pieces of merchandise have 
been broken, how many damaged by dirt, the number of acci¬ 
dents, the complaints against employees and delays. 

A large number of complaints are due to wrongly addressed 
packages or packages on which the address has become soiled 



Fig. 18.—Complaint blank for wrong addresses. 

beyond hope of deciphering. The Pettis Dry Goods Com¬ 
pany, of Indianapolis, has devised a scheme for handling 
cases of wrong addresses efficiently and expeditiously. Par¬ 
cels returned because of wrong address are handed over to 
a girl for adjustment. She makes out a slip on the form 
illustrated in Fig. 18, which is sent to the superintendent’s 
office in case the customer should call to find out why the 
package was delayed. The same girl consults a directory 
or telephone book, and if necessary the clerk who wrote 
the sales slip, in the endeavor to ascertain the correct address. 
If it is impossible to locate the customer, the package is held 






















DELIVERIES 


111 


until complaint is made, when the complaint slip on file iden¬ 
tifies the matter at once. 

Special Delivery.—Special delivery is ordinarily regarded 
as an evil, yet the majority of stores offer this service, re¬ 
stricting it, however, as much as possible. Methods of 
delivery vary with individual stores and local conditions. 
The delivery boy is sometimes used, but ordinarily should not 
be employed because of the' temptation to abuse the special 
delivery service, since as long as there is a force constantly 
on duty, the motive for using it will not be lacking. 

Special deliveries are and should be authorized by some 
store official before being sent out. A special requisition form 
is frequently used. Suggestions on the part of over-anxious 
salespeople to customers of the special delivery service should 
be discouraged. 

PERSONNEL 

A department store executive who made a thorough study 
of the delivery department stated some time ago that 70 per 
cent of the success or failure of a delivery department de¬ 
pended upon the human and personal element connected 
with it. It is generally well known that the personal element 
has been most difficult to contend with, and as yet compara¬ 
tively few stores have attempted to correct any of the faults 
so evident in a poorly conducted delivery department. 

Competent authorities on store management have frequently 
stated that one of the most successful ways of getting the best 
kind of work out of employees and of turning poor human 
material into good workers is to bring about a realization 
on the part of all employees, however humble their position, 
of the fact that their service is vital to the successful con¬ 
duct of the business. It is necessary, in short, to make each 
worker feel his task is important, and that loyal, efficient 
service will receive a just reward. 

The delivery truck driver is in a somewhat different position 
from other store employees. During a great part of the day 
he is his own master as far as any direct supervision from the 
store is concerned. Whether he does his work quickly and 
well depends upon his interest in the work and not upon any 


112 


THE MERCHANTS’ MANUAL 


stimulus directly applied. This interest is developed, first 
by proper training in the performance of his duties, second, 
by a careful system of records, and third, by a monetary 
incentive. 

Training of Drivers.—The driver represents the store to 
the customer. A badly trained driver creates a poor impres¬ 
sion. The ordinary path to a driver’s position is through 
serving as a helper. The efficiency of this promoted helper 
is dependent on the teaching ability of the driver. If he has 


No. 37081 

Driver- 


ThlB Coupon must be banded by driver to Superintendent of Delivery 

Houle No- 


Figures once made on this sheet must not be changed or erased 

Dale_ 

$ 


No. 37081 
Driver_ 


Hi 

*<3“ 

Amount 

Charged 

Sg„ 

Amount 

Charged 

4|s 

Amount 

Charged 

Hi 

1 Amount 

Charged 

i 


31 


61 


91 


2 


32 


62 


92 


3 


33 


63 


93 


4 


34 


64 


94 


5 


35 


65 


95 


6 


36 


66 


96 




37 


67 


97 



Fig. 19.—Driver’s checking sheet. 


had a good driver as instructor, the chances are he will make 
a good driver himself, but if he has had a bad instructor, he 
too will turn out badly. 

Although few stores employ instructors for drivers and 
helpers, the efficient management of the large delivery de¬ 
partment will sooner or later render such a procedure neces¬ 
sary. 

A driver should know how to load his wagon or truck prop¬ 
erly. If the load is properly arranged at the loading plat¬ 
form, the chances are that breakages and other accidents to 
merchandise will be few. 


































DELIVERIES 


113 


A driver should know how to drive his car. 

A driver should be well acquainted with store rules and 
regulations for delivery. If parcels are not to be left next 
door, he is responsible for the helper’s observance of this rule 
as well as for his own. 

Driver’s Records.—Since the driver has little time to make 
entries on record forms, all paper work should be made as 
simple as possible. It is necessary, however, that record should 
be kept of all merchandise entrusted to the driver’s care. Fig¬ 
ure 19 shows the form of record used by R. H. Macy’s as a 
driver’s checking sheet. Each morning, before starting out, 
the driver enters his merchandise. For C.O.D. packages the 
amount is filled in, while for paid packages a simple check is 
sufficient. The driver’s figures are compared with those of 
the entry clerk and the driver signs the sheet. 

When the driver brings back packages, he secures a receipt 
for them from the entry clerk. All C.O.D. packages must be 
accounted for in money or in returns. Helper and driver sign 
for all paid packages delivered and are thus directly respon¬ 
sible. 

Breakage records may seem desirable where losses through 
this cause are large, but negligence on the part of the driver 
is difficult to prove and any deduction from the pay envelope 
unwise. The application of a well-planned bonus system is 
effective in reducing breakages. 

Incentive.—It makes no difference how cautiously delivery 
employees are selected, how carefully they are trained in the 
discharge of their duties, or how pleasant their working con¬ 
ditions are, if sufficient financial compensation is not given. 
The delivery employee desires his loyal and efficient work to 
be rewarded in his own increased earnings, and not in welfare 
work. The simplest form of incentive is a bonus system. The 
instant a driver understands that his remuneration will be 
based on the work he actually accomplishes, he becomes 
vitally interested. 

Best results are generally secured when the bonus is paid 
monthly or weekly. Immediate reward for effort keeps inter¬ 
est alive and competition keen. When long periods of time 
elapse between the payments, interest abates, efficiency lags 
8 




114 


THE MERCHANTS ’ MANUAL 


and enthusiasm is in evidence only at the time of their re¬ 
ceipt. 

The bonus should be based on efficiency in discharge of 
duties and attendance. If the incentive is substantial enough, 
the driver is generally willing to adopt the means of acquiring 
it. The results are a satisfied worker, lower labor turnover, 
more efficient work, less waste and breakage, better service to 
the customer, and reduction of operating expenses. That 
bonus systems are practical is proved by the fact that they 
are successfully operated with good results in some of the 
best stores in the country. Systems now in use are based on 
attendance, on efficiency, or on a combination of both. Some 
stores pay the bonus in the form of cash prizes. The Rosen¬ 
baum Company of Pittsburgh, for example, gives a certain 
amount for the lowest cost per mile for the month, lowest cost 
per package, most miles per gallon of gasoline, etc. 

The ordinary plan is worked out according to merits and 
demerits. While there is too much divergence in practice to 
give any standard example of practice, the plan as worked out 
by the Famous and Barr Company, of St. Louis, will give a 
general idea of what is contained in the bonus. 

The general conditions are two: First, vouchers for lost 
merchandise which have been entered on the driver’s sheets 
and for which he cannot show delivery will be charged against 
his bonus at their face value; second, offenses will be charged 
against drivers in points, each point to represent $1. 

1. Any driver reporting late three times in one month will 
be charged up with one point; every time thereafter in the 
same month, up to 10 times, one point for each offense. 

2. Any driver having three tracers recorded against him in 
one month will be charged with one point, and one point for 
every additional tracer during that month. 

3. Any driver with three complaints recorded against him 
in one month will be charged with one point; and for every 
complaint additional another point. (With exception of Article 
16.) 

Complaints which will be charged against drivers’ records 
as above outlined are as follows: 

1. Delayed delivery. 


DELIVERIES 


115 


2. Merchandise delivered damaged. 

3. Wagon calls delayed. 

4. Misbehavior of boys. 

5. Rear- and side-door delivery. 

6. C.O.D. change. 

7. Not using sidewalks but crossing lawns. 

8. Mistreatment of horses. 

9. Fast or reckless driving. 

10. Improper return of merchandise. 

11. Improper delivery of merchandise in connection with 
condition of wrapping, fiber boxes, unpacking in wagon, 
pounding doors, ringing door bells, yelling “Name of Store,” 
throwing packages in windows, leaving packages on porches, 
leaving packages with neighbor without notification card, 
delivering merchandise with other wagons than our own. 

12. Laying loads or arranging splits in an objectionable 
manner. 

13. Splitting boys too heavily. 

14. Smoking on wagons or around store property. 

15. Permitting others than employees to ride on wagons. 

16. Violation of any regular rules. 

The following complaints will be charged against drivers' 
records at from one to five points each according to the seri¬ 
ousness of the offense, irrespective and independent of the 
aforesaid complaints: 

1. Impudence. 

2. Leaving wagon in front of saloons or other objectionable 
places. 

3. General carelessness conducive to accidents. 

A careful and accurate record of each and every violation 
will be compiled and kept by the Delivery Department. Each 
driver will be notified of every charge against his record. 

Some firms furnish uniforms without charge to drivers and 
helpers as an added incentive. Employees consider the saving 
in clothes as a valuable economy. The store benefits in the 
improved appearance of the drivers. The John Wanamaker 
Company of New York has uniforms with military effect and 
puttees. These are less likely to be damaged jumping on and 
off the vehicle. Some firms employ tailors to take care of 


116 


THE MERCHANTS’ MANUAL 


employees’ uniforms, each employee being required to leave 
his uniform in his locker at night where it can be inspected and 
repaired. 


EQUIPMENT 

The equipment of the delivery department is a most impor¬ 
tant factor. 

There are arguments for and against every kind of delivery 
equipment on the market and the only sound basis upon which 
purchases should be made are those outlined in the first part 
of this chapter. First cost is not a controlling factor although 
too often it is made one. Durability, dependability, and 
economy of operation and maintenance are far more impor¬ 
tant. These can be obtained only after a careful study of per¬ 
formance records. 

It can be said in general that one make of truck should be 
used for a fleet, unless varying uses demand special trucks. A 
standardized fleet means simplicity in maintenance and repair. 

Bodies.—The relation of the body for a dry goods delivery 
truck should be given careful thought. Not only must it fit 
mechanical requirements but it must be designed to represent 
the store to the customers and to the public. Thousands of 
people see these delivery trucks daily and the appearance of 
the body invariably claims their attention. 

In addition to appearance, there are four points to consider 
in the choice of a standard body design for the delivery fleet: 

1. The character of the goods to be transported in the truck. 
The smaller store may find it necessary to use the same truck 
for small and for bulky articles. The larger stores will find it 
better to have special trucks for heavy articles. But if both 
small and large articles are to be carried in the same truck, 
bodies must be arranged with this purpose in mind. 

2. Although the body must appear attractive, it must be 
large enough to carry enough goods to cover the route. 

3. The body should not be too heavy. 

4. The driver should be protected by some method against 
cold and wet. Such protection will materially increase delivery 
efficiency. 


DELIVERIES 


117 


Tires.—Pneumatic tires are almost universally used for 
dry goods and department store delivery trucks. The type of 
tire will depend on the weight to be carried, the average speed, 
road conditions and other minor factors. 

The service which any given tire will render depends on the 
care and attention rceived. The chauffeur is responsible for 
three-quarters of the care and the garage force for the other 
quarter. 

Under-inflation is probably the most common fault. Im¬ 
proper application of chains is another factor causing rapid 
deterioration. Sudden stops and starts cause large flat spots 
on tires. Switch points and crossings on car tracks cut the 
tread. Misalignment of front wheels will destroy the useful¬ 
ness of a tire in a very short time. Fabric breaks caused by 


SUPERINTENDENT OF DELIVERY 


Foreman or 
the Stable 


Garage 

Mana g er 


Stable Man j 

Watchmen 


Night Foreman 


| Stock Clerks 
Mechanics Washers Jan 

Fig. 20.—Stable and garage organization chart. 


careless backing into curbs or running over bumps at high 
speed can be avoided by proper care. 

The Garage or Stable.—The superintendent of delivery 
should be in direct control of all equipment, whether horse- 
drawn or power-propelled. The arrangement is shown in Fig. 
20. If both horses and trucks are used, the garage and the 
stable will be under separate foremen but coordinated under 
the control of the delivery superintendent. 

The stable force is usually reckoned at one man for every 
six or eight horses, and this force should take care of wagons 
and harness as well. 

In the garage the night force is most important, for during 
that time the major part of the repairing and all washing and 
cleaning must be done. Where drainage conditions are prop¬ 
erly arranged, one washer can wash from fifteen to twenty cars 
during the night. 










118 


THE MERCHANTS’ MANUAL 


Drivers should not be responsible for mechanical adjust¬ 
ments on cars, for lubrication, gasoline or other supplies. This 
is a garage matter. 


MECHANICAL TROUBLE 

DATE _ _ 


KIND OF 
TROUBLE 


TRUCK 

NO. 

ENGINE 


I 

__£kUTCH_ 


Z 



FLYWHEEL 


3 

FRONT 
_ SPRINGS. 

REAR 

SPRINGS 


4 


5 

TIRE 

TROUBLE. 


6 

FRONT AXLE 


7 

_R_EAR_ AXLE 


_6_ 


( Administration) 

Fig. 21.—Graph recording mechanical troubles. 

One authority gives the following figures as an index to 
number of men required for a garage force: 


Store 

Number of Cars 

Types 

Cars per man 

A 

40 

Same 

4 

B 

15 

Same 

3 

C 

35 

Same 

4 

D 

60 

Same 

5 

E 

65 

All types and sizes 

6 





























DELIVERIES 


119 


Performance Records.—A great many stores rely on daily 
reports from drivers as an index to the car’s condition. Un¬ 
fortunately, many drivers are indifferent, or forget, or wait 
until the trouble becomes serious before reporting it. Some 
supplementary system is, therefore, necessary for the best 
results. In some cases a mechanic makes a weekly inspection 
independently of the driver’s report. The J. L. Hudson Com¬ 
pany employs a first-class mechanic who does nothing else but 
study the performance of the company’s trucks. 

One interesting trouble chart is illustrated in Fig. 21. Each 
time a mechanic makes a repair a line is drawn from the type 
of trouble on the list to the truck number. When three lines 
go to one truck an investigation is made to determine the 
cause. For example, in the chart the fact that Truck 7 had 
trouble with engine, rear springs and rear axle would seem to 
indicate too heavy a load was being carried, etc. 

Some firms carry out a system of inspecting vehicles and 
giving rewards for best appearance. This has been found ef¬ 
fective in some cases. Where elaborate bonus systems are 
used, it is, of course, hardly feasible. In one case awards are 
given on following points: 


1. Inside of car. 10 

2. Driver’s seat and windshield. 5 

3. Brass, if any. 5 

4. General condition of car outside. 2 

5. Condition of driver’s uniform. 5 

6. Condition of helper’s uniform. 3 

Total. 30 


COOPERATIVE AND PARCEL POST DELIVERY 

The idea of cooperative or consolidated retail deliveries is 
not new. It has often been tried out but in few cases has it 
been successful. There is no inherent reason from a physical 
standpoint why deliveries should not be made in this way 
more economically than where each store maintains its own 
delivery system, but there are many practical objections. In 
the first place, there is the supposed value to the store of its 
own delivery service as a means of creating good will, and the 









120 


THE MERCHANTS’ MANUAL 


fact that the driver of the cooperative delivery wagon has no 
interest in any particular store. In the second place, there is 
a certain amount of extra delay due to sorting packages at the 
clearing house. Whether these objections can be overcome or 
not is largely dependent on the cooperation of the principal 
retail stores in the community. 

One of the best known successful cooperative delivery sys¬ 
tems is the Eleto Company, a private corporation controlled 
by Lord and Taylor and James McCreery and Company. 

In Boston the Clearing House Parcel Delivery Company 
takes care of deliveries in the city and the outlying suburbs 
for many of the large retail stores. Otherwise many stores 
could not afford to maintain daily deliveries to distant points. 
Packages are delivered at an average rate of 15 cents. A 
quarterly audit determines the tariff which is not to exceed the 
15-cent limit. Packages are billed to the stores on the count 
system. An overcoat might take two counts, while a refrigera¬ 
tor would take ten. 

One important point in connection with cooperative delivery 
is that the store is freed from responsibility for accident from 
delivery vans, which sometimes is a serious item. 

Parcel Post.—Undoubtedly the government parcel post 
system offers great possibilities in delivery service. As far as 
cost and methods are concerned, it is still in a formative and 
experimental stage. The experience of the retail stores of St. 
Paul with parcel post has given that city much publicity and 
reports are favorable as to results obtained. 

The Traffic Group of the Boston Retail Trade Board made 
an extensive survey of parcel post possibilities and advised an 
extension of the government service although not considering 
it advisable to abandon private delivery entirely. This Com¬ 
mittee tabulated the advantages of parcel post as follows: 

1. Decrease in costs. The St. Paul merchants claim they 
have saved from 5 to 14 cents on approximately every package. 

2. Improvement of service. 

a. More prompt delivery of parcels. 

b. Delivery to proper address of parcels incorrectly ad¬ 
dressed. 

0. Delivery of parcels by known persons. 


DELIVERIES 


121 


d. Reduction of complaints for non-delivery. 

3. Protection from loss of money on C.O.D. packages. 

According to one of the St. Paul stores the disadvantages 
are: 

1. A seemingly excessive C.O.D. fee. (Charge of 10 cents 
plus 3 cents for money order.) 

2. Inability of the postman to discuss a delivery as the 
store’s representative. 

3. Maximum on weight and size of parcels deliverable by 
parcel post too small. 

4. Need for paying for each individual money order on 
C.O.D. remittances. 

Probably the greatest obstacles are the disposition of the 
stores’ present equipment and the enlargement of government 
facilities to take care of increased demands. 


CHAPTER X 


MANUFACTURING 

Many of the larger department stores maintain depart¬ 
ments for the manufacture of various articles to be sold in 
the store. The motives behind this assumption of the manu¬ 
facturer’s function are numerous. Furthermore, the reasons 
for different manufacturing departments in the same store 
are not the same. The bases of the majority of them may be 
found among the following: 

1. Service to the customer. The optical department of 
R. H. Macy and Company is said to fill between 200 and 300 
prescriptions daily. Free alterations is perhaps the most uni¬ 
versal service. The aim and purpose of such manufacturing 
departments is to secure the customer’s trade. Although some 
service manufacturing departments are run at a loss, it is 
always a moot question whether such a policy is worth while 
in the long run. 

2. Convenience for the store. There are a great many stores 
manufacturing curtains and draperies, slip covers, shades and 
awnings. Obviously if the store is to carry such materials it 
should be prepared to make them fit the particular installation. 
For purposes of convenience many stores do this work on their 
own premises rather than have it done by contract. 

3. Integration of functions. The movement to have goods 
delivered direct from manufacturer to consumer has not 
escaped the department store.. Not content with securing 
goods for retail sale direct from manufacturers, some large 
stores have attempted manufacturing on their own account. 
There is no inherent reason why this should not be done suc¬ 
cessfully. The larger chain systems maintain manufacturing 
plants. The question is chiefly one of being able to market 
the output and dispose of nationally advertised goods as well. 

Prevalence of Manufacturing.—The results of a study of 
manufacturing and repair departments by the Bureau of 

122 



MANUFACTURING 


123 


Research and Information of the National Retail Dry Goods 
Association are instructive as showing both articles manu¬ 
factured and relative order of importance. See Table II. The 
majority of manufacturing departments were given over to 
the following eight articles in their order of occurrence: 

1. Curtains and draperies. 

2. Dressmaking. 

3. Millinery. 

4. Shades and awnings. 

5. Upholstering. 

6. Candy. 

7. Furs. 

8. Carpets and rugs. 

Additional items are in great variety. Several stores operate 
bakeries. Some maintain stationery and engraving depart¬ 
ments. There is no uniformity, present conditions being 
rather the result of incidental growth than concerted action. 

Typical difficulties encountered in maintaining manufactur¬ 
ing departments are illustrated by the experience of many 
stores with drapery manufacturing. There is a definite ebb 
period in the year when there are not enough orders to keep 
the workers in the manufacturing department busy. Some 
stores have attempted to solve this problem by manufacturing 
for regular stock. Others have followed out a policy of keep¬ 
ing a minimum force and when rushed with orders letting the 
surplus out on contract. As most of the business is of a sea¬ 
sonal nature, stores cannot provide the space nor afford the 
help necessary to keep the department going all the time. 

Many stores give out all their work to individual contrac¬ 
tors. Lord and Taylor has found this policy to work out well. 
Wanamaker, Altman, Stern, and Gimbel, however, do most of 
their upholstery and drapery work in their own workrooms. 

The Fur Department.—Some stores maintaining fur de¬ 
partments not only store furs, but also manufacture and repair 
them. This raises a complicated problem in the matter of 
how expenses should be allocated. It is desirable to know 
whether the fur repair department returns a profit during the 
year, quite aside from alterations in furs made free for cus¬ 
tomers. Practice differs widely. Stores which separate their 



(Study by Bureau of Research and Information of N. R. D. G. A. 1920) 


124 


THE MERCHANTS ’ MANUAL 


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MANUFACTURING 


125 


fur repair department from the selling department are better 
able to determine whether it is profitable to maintain a fur 
manufacturing section or to have the work done under con¬ 
tract. Where departments are separated in this way, if the 
regular fur department wishes any repairs made free of charge 
to the customer, such repairs are made by the fur repair de¬ 
partment and charged to the fur department, which must stand 
the loss. 

Contract Departments.—Sales and expenses of contract and 
selling departments should be segregated on the books. The 
contract department should be treated as a separate and dis¬ 
tinct division of the store, transferring to it all merchandise 
that is to be worked upon or sold by the employees of this 
department. If operating under the retail plan, this mer¬ 
chandise should be transferred out of the selling department 
at cost and should be taken into the contract department at 
the original cost. It is impractical to operate a contract de¬ 
partment on a retail basis unless an accurate record of the 
cost of each job is maintained. 

In smaller stores it is impractical to keep job cost records 
and to make the bookkeeping entries as would be necessary 
where a continuous record o‘f gross profits is maintained. 
Under such circumstances, the contract department should 
be credited with all sales and charged with all purchases and 
transfers of material, labor and expense applicable to the 
selling department. 

It frequently occurs that in competitive bidding the con¬ 
tract department cannot secure a price that will cover all of 
the expenses which might properly be allocated to this division. 
Most executives feel that any amount secured in excess of 
the actual cost of material, labor and direct expense of this 
department is a profit, inasmuch as it serves to reduce the 
necessary expense of the selling divisions. 

Alterations.—The expense of maintaining alteration de¬ 
partments is generally pure outlay, to be included in the cost 
of selling the goods, and considered as a service to the cus¬ 
tomer. Whether this service is necessary or not has not yet 
been decided. Opinion is about equally divided. A recent 
questionnaire sent out by the National Retail Dry Goods 


126 


THE MERCHANTS’ MANUAL 


Association determined that, out of 790 stores replying, 378 
charged for ready-to-wear alterations; 371 made alterations 
free of charge, while 41 charged for alterations on special 
sales goods only. Few stores placed a charge on alterations 
of men’s clothing. 

It was found that to operate an alteration department cost 
from 2 to 5 per cent of the total ready-to-wear sales in the 
average store. In some cases it was even higher. Several 
stores reported that, through a nominal charge for alterations, 
they recovered 65 to 75 cents of every dollar spent, while 
some made sufficient charge to cover the entire cost of the 
work. 

In a number of cities, through local retail associations, 
merchants have entirely eliminated free alterations, and have 
successfully maintained a standard scale of alteration charges 
for all stores belonging to such associations. 

In other cities individual merchants have made attempts to 
cut the cost of alterations. In one large men’s clothing store, 
the only alterations allowed are the shortening or lengthening 
of sleeves and trouser legs, and adjusting the waist. The 
maximum allowed to be taken in at the waist is 2 inches and 
to be let out 1 inch. If 3 inches are taken in, it is explained 
that it will put the back pockets together and make a faulty 
job. If more than 1 inch is let out, it will make the outlet 
too weak. 

There is, however, no unanimity of procedure. Some retail¬ 
ers act on the assumption that alterations are just as necessary 
and should be just as numerous today as when clothing models 
were merely measurements across the chest and from foot to 
shoulder. Many stores adhere to the belief that one fitting 
is sufficient and if other fittings are desired make a standard 
charge. 

It is believed in many stores that a good fitter can satisfy 
a customer with one fitting. Many fitters are rated accord¬ 
ing to the number of fittings they find necessary. In some 
stores the pay of saleswomen is based in some degree on the 
number of alterations it is necessary to make on garments 
they have sold. 

The belief was formerly general that garments should be 


MANUFACTURING 


127 


sold, regardless of size or line, simply to make a sale. But 
the added expense in the alteration department cut into depart¬ 
ment profits to such an extent that this policy has been largely 
abandoned. It is generally recognized that the efficient sales¬ 
woman will recommend only those garments which fit the 
customer well enough so that extensive alterations will not be 
necessary. 


CHAPTER XI 


PURCHASING STORE SUPPLIES 

The functions of a supply buyer of a retail store are to 
buy necessary supplies, as, for example, for wrapping and 
packing purposes (such as wrapping and tissue paper, twine, 
excelsior, cases, nails, glue and cardboard boxes), stationery 
supplies, printed forms, automobile delivery trucks, gasoline, 
oil, tires, stable supplies and horse feed, window display fix¬ 
tures, uniforms for delivery men and elevator operators, res¬ 
taurant equipment and supplies for carpenters, painters and 
repairmen as well as engine-room supplies. Office supplies 
and equipment are also included. 

The supply department also distributes them. It must 
keep track of all supplies and equipment used in the various 
departments, stock on hand and orders to different vendors. 

The principal activities of the supply department are as 
follows: 

1. Maintaining correct records of stock on hand at all 
times. 

2. Issuing all purchase orders and providing for sufficient 
stock to cover requirements. 

3. Authorizing issue of all materials from supply depart¬ 
ment and providing a check on all supplies issued, 

4. Controlling store’s investment in and maintaining a 
perpetual inventory of the cost of all stock on hand. 

The Supply Department.—In spite of the multitude of 
purchases required for store supplies, and the wide variety in 
their character, a comparatively small personnel suffices due 
to the excellence of the record system employed. The pur¬ 
chasing department at Macy’s consists of five people. 

The man at the head of the supply department should be 
of executive caliber since he has to assume the responsibility 
of a man handling, in some cases, a million-dollar business. 

128 


PURCHASING STORE SUPPLIES 


129 


As the Dry Goods Economist says: “The purchasing agent 
must be a man who, apart from keeping a clear head under 
a load of detail, must be creative and constantly on the look¬ 
out for new equipment and devices which will save time and 
labor or give better service to the customer.” 

In many cases, because of the responsibility attached to 
the position of purchasing agents, those who have held it have 


SPECIAL 

ORDER |M 

No. ■* 

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to and upon the further eipresi condition that this mar-*-*--* - •- ‘ ... 

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Law approved September 1st, 1916, and effective 
accordance with provisions of said law. 

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MARK YOUR INVOICE AND / 
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Counter>i| 



Fig. 22.—Purchasing order. 


been advanced to high executive positions. Where coopera¬ 
tive buying of supplies is practiced, the most efficient pur¬ 
chasing agent is usually commissioned to buy supplies for the 
group. 

Purchasing Orders.—Figure 22 shows the form of purchas¬ 
ing order used by R, H. Macy and Company. It is made out 
in triplicate, the original being sent to the vendor, the dupli¬ 
cate to the receiving department, and the triplicate being filed 
in the department issuing the order. 

9 












































130 


THE MERCHANTS' MANUAL 


In another large store supply orders are made out on billing 
machines with six copies, distributed as follows: 

1. To the vendor. 

2. To the purchasing agent for the files. 

3. To the assistant purchasing agent for expediting pur¬ 
poses. 

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4. To expense department for figuring quotas and budgets. 

5. To receiving department. 

6. To department making the requisition. 

The assistant purchasing agent in this department has very 
definite and important duties. He is supposed to know the 
exact status of all shipments expected. He should be able 
to give the car number of the shipment, when it was shipped, 
when it is expected, etc. 











































































































PURCHASING STORE SUPPLIES 


131 


Each department, whether non-selling or selling, is given 
a budget which is made up after consultation with the head 
of the department. The expense department knows at every 
moment just how much each department has left of its supplies 
quota. Even the mechanical engineer in charge of the engine 
room knows just how much oil he is allowed. Every pur¬ 
chase order shows him how much he has spent and how much 
he has left to spend. 

Inventories.—Figure 23 shows the type of form in use in 
one of the country’s largest department stores as a record of 
perpetual inventory. This covers a four-year period and in 
many ways offers unique advantages. Instead of separate 
cards for purchase order entries, supply records, and receipts, 
all of these items are on one card, ready for instant reference. 

Each card covers one item only. They are filed in a large 
book. To render the system even more compact, cards cover¬ 
ing different kinds of the same articles are filed on the same 
page of the book. The name of the article appears at the 
bottom of the card so that when cards overlap, the name of 
the article is always visible. 

Form A shows the face of the card. At the top there is 
space for eight different vendors, in case the manufacturer is 
changed for any reason, or if the same article is purchased 
from several manufacturers. The purchase order portion of 
the card contains space for date, order number, vendor num¬ 
ber, quantity, price, and point of shipment f.o.b. The price 
is entered per unit for each purchase, forming a complete 
price record for each order. 

The supply record section of the card gives, by months, 
quantity used and quantity on hand, also the minimum sup¬ 
ply for the article, and the regular quantity of reorder. 

Form B shows the reverse of the card. This provides space 
for date of receiving the articles, the quantity, and the order 
number. 

Figure 24 shows how purchases in this same store are cor¬ 
related for all departments. Each one of these cards covers 
a separate item, and on each card there is a column for each 
department. The department requisitioning supplies is 
charged out the cost of what it orders. Figures are totaled 


132 


THE MERCHANTS’ MANUAL 


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. 


. 




Fig. 24.—Form showing how purchases are correlated for all departments. 
















































































































































































































































PURCHASING STORE SUPPLIES 


133 


ance a month. Department heads can see at any moment just 
how their supply expenses are running. 

This form has space for minimum quantity, quantity on 
hand, total quantity, unit cost and total cost. 

In connection with unit cost, whatever is left at the end of 
the month, supposing next month’s supplies were purchased 
at a lower rate, is averaged up and the department is charged 
at the average price. 


Dept. 

REQUISIT 

OvW- 

ION TO OPERATING DEPT. 

,vv A 5050 

Date js * V K. Req'N 

QUANTITY ARTICLE PRICE CLASS 


Lf. Iuvjuo S 


Order From 


Purchase Order 


Shipping Date 




Form 192 Re* H Co. 


Fig. 25. —Requisition blank for supplies. 


Requisitions.—A typical requisition blank for supplies is 
shown in Fig. 25. When this form, made out in duplicate, 
comes in to the purchasing department, it is checked up to see 
whether it is in proper units and whether the department is 
within its quota. If everything is in order, it is sent to the 
supply room to be filled. One copy is kept there while the 
second copy comes back to the purchasing agent. The head 
of the department ordering authorizes all requisitions. 

































134 


THE MERCHANTS' MANUAL 


At Macy’s there is a somewhat more elaborate system of 
requisitions, divided according to the character of the supply. 
These forms are shown in Fig. 26. The originals are 4% inches 


Sta 

Departmt 

(THIS corr TO BE RETURNED WITH SUPPLIES) 

tionery Supplies Requisition 

rw i9i 

nr 


Stela 

<^u*teO«7 

Ik Tkte ( •Junta «... Fo.m Nue.be. *U pe—.bl., Mtem 
mm4 aaftea 

ir (AU muai b. ter farm •wraWI 








L- "^ " - 











NOTICE 
M. the as 
be rcfuicc 

—Requisitions must be In Supply Dept, by 3 P. 
r previous to felting goods, otherwise they will 



SI Aft QJANlirr 

etio.o 

Name. Description and Size of Supplies Required- 










(THIS COnr TO BE RETURNED WITH SUPPLIES ) 


Packing Supplies Requisition 

Date_191 


Department. 


Requititioni must be in Supply Dept by 3 P. M. the day previous 
to feiunj foods, otherwise (bay will be refusorL 


Countersigned by. 


SEND thi 

DEPART! 

To be chi 

DUPLICATE WITH THE ORIGINAL REQUISITION AS IT WILL 
RETURNED WITH THE SUPPLIES FOR YOUR RECEIPT. 

t£NT EXPENSE REQUISITION FOR SUPPLIES 

Date 191 


QUANTITY 

DESCRIPTION Writs lull detaili plainly. 








_ 












Si /f nature 


•uk. i.(a o* UMUtel 


D 


Dale 

Supply Department Store Purcko 

77 

191 

ee Voucher 

L 


Quantity 

A nick 

Sale* 

Clerk 

Number 

Price 

T ©lal 



































tap's W tsaaflie* 

NOTE 

Thu voucher u to be used for supplies purchased in the store bi 
Supply Department only, and it valid when signed by the Sup< of Supi 

(he 

>lies 


Fig. 26.—Requisition forms. 


by 7 inches. On the reverse side of the originals are cautions 
as to use. 

Form A is a supply department store-purchase voucher 





























































































PURCHASING STORE SUPPLIES 135 

which covers purchases of “supplies” made by the store within 
the store, that is, transfers. 

Form B is a stationery supply requisition, covering requests 
for stationery alone. They are filled from the supply depart¬ 
ment’s reserve stock. 

Form C is a packing supply requisition, covering orders for 
packing material only. These are also filled from the supply 
department’s reserve. 


WRAPPING UNIT 1. 


Date 


Boxes 

Paper 

Twine Units 

Total 

Charge 

D. 

F. 

M. 

D. 

F. 

M. 

D. 

F. 

M. 

2 

3 

5 

6 

etc. 


2 

8 

9 

14 

etc. 

2 

1 

1 

etc. 

6 

10 

11 

6 

etc. 









Total Used. 

33 

5 

33 




33 

5 

33 



Amount of Supplies. 

30 

.00 






2.00 




Dept. Supplies (Prorated) 

13.94 

2.12 

13.94 




.93 

.14 

.93 

32.00 

Dept. Salaries (Prorated) 

5.58 

.84 

5.58 

- 

_ 





12.00 

Total Expenses. 








44.00 


Wrapping unit 1 would keep a tally from the sales of the number of bundles wrapped 
for each department it handles. By collecting the supply requisitions the accounting 
division can charge each wrapping unit with the exact cost of all wrapping supplies. 

Fig. 27.—Form for prorating wrapping charges. 

Form D is a department expense requisition for supplies. 
This form covers requests, apart from those for stationery 
and packing material, which are filled from the reserve stock. 

Where supplies are requisitioned for a wrapping desk serv¬ 
ing several departments, a special form is necessary for the 
proper prorating of these supplies to the various departments. 
In Fig. 27 a form designed for such a purpose is illustrated. 
The wrapping unit keeps a tally from sales of the number of 
bundles wrapped for each department handled. By collect¬ 
ing the supply requisitions, the accounting division can charge 




















































136 


THE MERCHANTS’ MANUAL 


each wrapping unit with the exact cost of all wrapping sup¬ 
plies. 

Cooperative Buying of Supplies.—A disadvantage which 
the smaller store always labors under is the inability to secure 
discounts which the quantity purchases of the larger stores 
obtain. Therefore, it is frequently, possible for such stores 
to unite in making their purchases of supplies in order to se¬ 
cure the advantages of mass buying. 

This practice is not confined to smaller stores, however. 
The Retail Dry Goods Association of New York City has a 
membership of the majority of the important retail dry goods 
stores in the city. The supply buyers meet periodically to 
discuss individual store needs. Notes are exchanged as to 
whether it would be wise to purchase certain supplies or defer 
the purchase until a more advantageous time. In this way 
it is possible to reach a collective market judgment. 

The secretary of the association is commissioned to buy the 
supplies which the purchasing agents of the stores have agreed 
to buy jointly. He is able to secure the lowest possible mar¬ 
ket scale, since he represents such a large purchasing power. 
This practice also frees the purchasing agent of the member 
stores from a great deal of dickering with manufacturers and 
agents. 


SECTION IV 


STORE ORGANIZATION 
AND MANAGEMENT 









CHAPTER XII 


ORGANIZATION 

Although a system of organization is as much needed in 
the small store as in the large, the want is not felt so acutely 
until differentiation of functions and complexity of detail 
make it compulsory. In the evolution of the department store, 
organization has played a subordinate role until recent years. 
As the store grew, arrangements were made to take care of 
new and enlarged functions as seemed best at the moment. The 
result was a working but not an efficient organization. At 
present the application of scientific methods of management 
to retail stores has brought to the front the organization and 
the problems connected with its theory and application. 

THEORY OF ORGANIZATION 

It is rare to find two stores in which the methods of carry¬ 
ing out the organization plan have resulted in the same ar¬ 
rangement. This difference is due to many factors, chief 
among which are the size of the store and the character of 
the merchandising activity. The smaller the store, the less 
differentiation of functions is necessary. The more widely 
scattered the store’s activities, the more complex will be the 
plan of organization. Policy also plays an important part. 
The introduction of the so-called planning department into 
the larger stores has resulted in a greatly increased efficiency 
in organization layouts. 

The Organization Chart.—The organization plan is gen¬ 
erally expressed by means of the organization chart. As one 
authority says: “An organization in which executives and 
employees do not know or do not clearly see the relationship 
of their work and duties to the whole business scheme, is like 
a football team without a formation and without signals, each 
man playing a lone hand and often at cross purposes with 

139 




140 


THE MERCHANTS’ MANUAL 


his team-mates.” The organization chart pictorially sets 
forth the lines of authority from the president down to the 
errand boy. The duties and responsibilities of everyone in 
the organization are clearly set forth. 

The practical advantages of the organization chart to the 
store are many, among the most important being: 

1. Allocation of responsibility. Stores without organiza¬ 
tion charts are likely to contain many cases of over-lapping 
of functions and duplication of effort. This is due to their 
loosely jointed structure. The organization chart definitely 
places responsibility where it belongs. 

2. Coordination of functions. In a large store it is fre¬ 
quently difficult to visualize the correct relation of one de¬ 
partment to another, or of one individual to another. A 
carefully planned organization chart will do away with this 
difficulty. 

3. Scale of promotion. Opportunities for advancement 
are often outlined. 

4. Accounting. For accurate prorating of expenses, etc., 
the accounting department should know exactly where to 
charge expenses. 

5. Job analysis. The constantly growing importance of 
personnel selection and training is tied up with the organiza¬ 
tion chart which divides store activities into divisions, depart¬ 
ments, sections, and units. 

Types of Organization.—The first necessity for a sound 
organization plan is that it be definite; the second is that it 
must be coordinated with methods and systems now in use; 
and the third is that it must be controlled, for no type of or¬ 
ganization will run of itself. 

There are three types of organization in general use—the 
military, the functional, and the departmental. 

1. Military. The military type of organization consists of 
one-man control throughout. Whatever activities he dele¬ 
gates, the control remains in his own hands. All old-type 
retailing establishments belonged to this category. Rule-of- 
thumb methods predominate. The owner of the establish¬ 
ment is in himself merchandise manager, employment mana¬ 
ger, store superintendent, etc. 



ORGANIZATION 


141 


Fortunately the military type of organization in the dry 
goods field proved inadequate. The lack of cooperation and 
coordination inherent in such a plan prevented any wide ap¬ 
plication to the dry goods store. 

2. Functional. The functional type of organization came 
simultaneously with “Scientific Management/’ and was orig¬ 
inated by Frederick W. Taylor. The theory is that each 
man should be a specialist and have control of work coming 
within the classification of his specialty. In some cases the 
functional organization plan has been very successful; in 
others it has failed. Too much conflict of authority makes it 
difficult to decide who is responsible. To apply the functional 
organization to a store it is necessary to combine it with 
departmentization. 

3. Departmental. As its name implies, the departmental 
organization plan segregates the different divisions of the store 
according to the type of work. Tendency is for decentraliza¬ 
tion of control, each department forming a virtually self-gov¬ 
erning entity, subject to the general supervision of the man¬ 
agement. The defect most commonly encountered is lack of 
coordination and cooperation, both factors vitally necessary 
for efficient merchandising. This defect, however, can be cor¬ 
rected by proper methods of coordination. 

From the foregoing discussion it is evident that the type of 
organization which best suits the retail dry goods or depart¬ 
ment store is one which takes into account both the function 
and the geographical location, or department. That is, the 
functional organization must be departmentized, and the de¬ 
partmental organization functionalized. It is only through 
some such expedient that proper coordination can be secured, 
with a clean-cut division of authority. 

It is difficult to give any rules or even advice as to the 
proper form of organization for a particular store. In each 
case this can be done only after intensive study of the 
specific conditions. The type and the size of the organization 
are largely a matter of the individual needs of each store. 
When the small store feels that the work is expanding so that 
extra buyers, merchandise men, or someone to devote his 
entire time to the supervision of the personnel are necessary to 


142 


THE MERCHANTS’ MANUAL 


the efficiency of the organization, then the time is opportune 
for considering a more definite organization plan. 

The same type and size of store will often have very differ¬ 
ent organization plans, yet each be highly successful. As an 
example of this in the specialty field, Saks and Company of 
New York does a very efficient business with a small number 
of store executives. On the other hand, Wm. Filene’s Sons 
Company of Boston has an extensive executive force, care¬ 
fully functionalized and departmentized. Yet the store of one 
type may be as efficient as the other. In other words, while 
there is as yet no standard organization plan which will fit 
every store, yet the general features, as illustrated in these 
pages, can be used to construct a plan for the store in question. 

APPLICATION OF ORGANIZATION 

Executive Control.—The administrative control of the 
average dry goods and department store is normally vested 
in a board of directors, elected by the stockholders. It is 
unnecessary to discuss the small store owned and operated 
under one-man control in which organization has not yet 
become a pressing problem. Furthermore, the partnership, 
although still in existence, is subject to so many disadvantages 
that its use is not advocated. Evidence is strong that the only 
practicable form is the corporation, created by charter accord¬ 
ing to statutory laws. These differ somewhat in different 
states. 

Stockholders may be few or many. In most cases, stock is 
closely held, but some concerns follow out a policy of broad 
distribution of stock, especially among employees. In the 
majority of states it is necessary for directors to be stock¬ 
holders as well. All necessary information concerning cor¬ 
porate rules and regulations may be obtained from the Secre¬ 
tary of State. 

The stockholders elect the board of directors, the election 
being held annually. The board of directors elects the officers 
of the corporation. 

The usual officers of any corporation are the president, the 
vice-president, the secretary and the treasurer. This is true 


ORGANIZATION 


143 


of the retail store, each officer, in addition to his corporate 
position, usually holding an executive position in the store, 
although such procedure does not necessarily follow. 

Administrative Control.—The store may be run by the 
board of directors, an executive board, a store council, etc., 
or it may be run by one official usually given the title of gen¬ 
eral manager. That is, store activities may be controlled 
either by the committee plan or the individual executive. In 
some stores there is both an executive board and a general 
manager. 

The executive board of L. Bamberger and Company is com¬ 
posed of 

Two members of the firm 
Four merchandise managers 
The publicity director 
The superintendent of the store 
The director of personnel. 

The store council of R. H. Macy and Company consists of 

Three officers of the organization 

The general manager 

The controller 

The advertising manager 

Five buyers. 

The executive committee of Wm. Filene Sons Company in¬ 
cludes 


The president of the company 
The general manager 
The store director 

The director of finance and accounts 
The director of merchandise and publicity. 

In the case of Wm. Taylor Son & Company, the board of 
control operates only in the absence of the general manager, 
and is made up of the 

Merchandise director 
Store director 
Controller. 

Obviously, the smaller the store the fewer executive heads 
necessary, although the functions will remain. Consequently, 


144 


THE MERCHANTS' MANUAL 


in the following pages, the functions will be treated. Whether 
these can be combined or not depends on the amount of work 
which is attached to each function. An efficient merchan¬ 
dising plan is built around positions and not around indi¬ 
viduals. 

The general manager in large stores holds an entirely ad¬ 
ministrative position. In the smaller store he may combine 
some of the subordinate executive and managerial functions 
such as those of advertising manager or store superintendent. 

The general manager of R. H. Macy and Company is 
charged with engaging, training and educating employees. He 
regulates salaries, controls transfers and discharges, enforces 
all rules and regulations. He decides whether or not merchan¬ 
dise is returnable for refund, exchange, or credit. He adjusts 
claims with customers. He is a final court of appeal for em¬ 
ployees who feel they have been unfairly treated. 

Store Organization.—In the average store, the organiza¬ 
tion is divided into four main sections, each managed by an 
executive. These are as follows: 

1. Merchandising—the Merchandise Manager. 

2. Publicity—the Advertising Manager. 

3. Store Service—the Superintendent. 

4. Recording and Control—the Controller. 

The above system is by no means universal. In the Filene 
organization, merchandise and publicity are combined. In 
the A. I. Namm and Son organization, the main divisions are 
termed finance, service, merchandising, and sales. Here, pub¬ 
licity is a sales function. The Jordan Marsh store has only 
two main divisions, merchandise and non-merchandise, with 
four subdivisions under each. The sales, publicity, merchan¬ 
dise service, and manufacturing departments come under the 
merchandise division. Service, maintenance, office manage¬ 
ment and personnel come under non-merchandise. 

Merchandising.—The merchandising section of a store is 
ordinarily in charge of a merchandise manager. To him all 
department buyers are responsible. He also plans for the 
securing, the storing, and in many cases the actual selling of 
goods. He is one of the most, if not the most, important 
executive in the store. 


ORGANIZATION 


145 


In regard to the handling of sales there is a division of 
opinion as to whether the merchandise manager should be in 
sole charge or whether there should be a sales manager as 
well, either independent of the merchandise manager and 
answerable only to the general manager, or subordinate to the 
merchandise manager. If there is a sales manager, it should 
be his duty to work side by side with the merchandise man¬ 
ager and the buyers in order to correlate as efficiently as pos¬ 
sible the buying and the selling of the goods purchased. It 
is difficult to differentiate the sales manager from the adver¬ 
tising manager. Frequently he holds both positions. 

Assistant merchandise managers, or group merchandising 
managers, as they are frequently called, hold semi-administra¬ 
tive positions under the head merchandise manager. The 
modern tendency is to place a group merchandising manager 
over several buyers of related departments such as women’s 
apparel, men’s apparel, etc. These assistants analyze sales 
figures and assist in laying out merchandising policies. 

The buyer is usually in charge of a department or perhaps 
several closely related departments. In the smaller stores he 
may have control of a considerable number of departments. 
The position of buyer carries with it a great deal of respon¬ 
sibility in the average store. In addition to being allowed a 
budget from the merchandise manager, buyers have a certain 
amount of money for emergency purchases, made on their 
own responsibility. For greatest efficiency buyers must be at 
all times in close touch with salespeople and with buying 
centers. 

The buyer is largely responsible for the esprit de corps and 
efficiency of the department over which he or she is in charge. 
Many buyers superintend personally the preparation of ad¬ 
vertising copy, layout of stock and window display. The 
buyer also has a great deal to do with training the sales¬ 
people in knowledge of merchandise, etc. 

The head of the comparison department in the larger stores 
is regarded as important in maintaining competitive merchan¬ 
dising efficiency. The comparison department is responsible 
for follow-up of prices compared with other stores through a 
force of shoppers; also responsible for follow-up in the home 
10 


146 


THE MERCHANTS' MANUAL 


store in matters of service and following out of store policies. 

It may also be responsible for the follow-up of foreign 
merchandise to see that reorders are placed in good selling 
lines. 

The Jordan Marsh Company has a promise department 
which is responsible for the follow-up of all promises made to 
customers in connection with the filling of orders; for seeing 
that merchandise reaches the customers within the promised 
time or that the customers are notified in case goods cannot 
be secured within the estimated time. It is also responsible 
for the control of wants turned in by salespeople to buyers 
when stock is short, or when merchandise not carried in stock 
is requested by customers. 

Manufacturing departments are ordinarily grouped under 
the various merchandise sections to which they normally 
belong. 

To sum up, the merchandising section is concerned mainly 
with buying and selling the goods, with the following organi¬ 
zation: 

1. The merchandise manager. 

2. Assistant or group merchandise managers. 

3. Buyers. 

4. Assistant buyers, aisle managers, etc. 

5. Salespeople. 

In addition, there are a number of comparison shoppers 
and perhaps a group of manufacturing departments. 

Publicity.—Publicity is ordinarily in charge of the adver¬ 
tising manager. It is his duty to devise ways and means of 
bringing the customers to the store. Although he must work 
in the closest cooperation with the merchandise manager he 
is rarely subordinate to him, usually having co-equal 
authority. 

There is a great deal of financial and statistical work to be 
done in estimating the merits of various media of publicity 
used, much budgeting of advertising appropriations, much 
haggling over space, and little actual writing of advertise¬ 
ments so far as the advertising manager is concerned. 

Sometimes, although not always, window display is under 
the control of the advertising manager. 


ORGANIZATION 


147 


The assistant advertising manager takes care of a portion 
of the detailed work. 

Copy writers usually write for an assigned group of depart¬ 
ments. They consult with buyers about make-up of adver¬ 
tisements, prices, materials, styles and other points to be 
featured. Special posters and booklets, house organs, etc., may 
come to the copy writers. 

The position of display experts is not standardized in the 
store organization, being partly a merchandising and partly an 
advertising function. 

Store Service.—The store service section is usually in 
charge of the store superintendent. The many and varied 
duties are largely the result of the store’s growth. Before 
the day of the educational training of salespeople, the task 
of engaging help was entrusted, along with other miscellaneous 
jobs, to the store superintendent, and there it stays. A few 
stores have revised the duties of store superintendents, but 
the majority of stores classify his work under three headings: 

1. Care of building and equipment, receiving, etc. 

2. Personnel. 

3. Service to customers. 

1. The care of building and equipment is usually entrusted 
to a mechanical superintendent who takes charge of engineers, 
porters, electricians, carpenters, painters, night watchmen, 
repairs, replacements, laundry, etc. 

The traffic manager, or someone with the duties of traffic 
manager without the title, takes charge of receiving, marking, 
stockrooms, warehouse, and imports. 

2. Under personnel, the average organization includes sev¬ 
eral departments, taking care of employment, training or edu¬ 
cational, and social or welfare work. 

The employment manager not only hires and discharges, but 
also superintends promotions, salaries, and bonuses. 

The educational director is concerned with training and fol¬ 
lowing out a store system. 

The social director directs welfare work and is in charge of 
employees’ restaurants, reading rooms, hospitals, etc. 

3. Service to customers varies, naturally, with the policy of 
the store in this respect. Nearly every store will have the 


148 


THE MERCHANTS ’ MANUAL 


delivery problem. Adjustments and complaints also will have 
to be provided for. 

The research department, although its activities are store¬ 
wide, is ordinarily placed under the store superintendent. 

The activities of the store service department may be 
summed up as follows: 


Receiving Department 
Receiving 
Marking 
Stock room 
Warehouses 
Buying rooms 
Custom House 

Inspection Department 
Inspection 
Packing 
Collecting 
Routing 
Cashiering 

Delivery Department 
Automobiles 
Garages 
Parcel post 
Freight 
Express 


Employment Department 
Applications 
Employment 
Salaries 
Timekeeping 
References 
Promotions 
Discharges 

Training Department 
Store system 
Salesmanship 
Errors 


Social Service Department 
Library 

Employees’ social activities 
Manager’s restaurant 
Absentee follow-up 
Entertainments 


Adjustment Department 
Complaints 
Credits 
Refunds 
Repairs 

Accommodations 

Correspondence Department 
Correspondence 
Stenography 
Mail distribution 
Mail and telephone orders 
Filing 

Planning Department 
Store studies 
Job analysis 
Wages plans 
Etc. 


Health Service Department 
Medical clinic 
Dental clinic 
Chiropody 
Physical training 

Building Department 
Light, heat, and power 
Elevators 
Telephone 
Repairs 
Ventilation 

Equipment Department 
Store arrangement 
Fixtures 
Supplies 
Salvage 



ORGANIZATION 


149 


Recording and Control.—The functions of the store con¬ 
troller have never been definitely set forth, but in general 
they cover the financial operations and accounting, together 
with full supervision of the office force. He also controls by 
schedule all buying, expense, and profit. Frequently the 
controller is in charge of the statistical department. 

The controller is one of the most important executives, inas¬ 
much as he is, in many instances, financial advisor of the 
firm. His breadth of vision in all cases should be unham¬ 
pered by the bookkeeping detail which so often renders him 
a mere routine machine. 

In some stores the store superintendent is entrusted with 
duties which in other stores are assigned to the controller, 
such as office management, statistics, research, etc. But in 
all cases the following functions are part of the controller’s 
section: 


Control Department 
Buying schedules 
Expenses 
Profits 
Inventories 

Accounting Department 
General accounts 
Bank balances 
Retail invoicing 
Sales auditing 
Cash control 
Payrolls 

Expense Department 
Statistics 
Taxes 
Insurance 
Real estate 
Legal matters 


Order and Invoice Department 
Orders 
Invoices 
Express charges 
Freight charges 
Claims 

Disbursing Department 
Accounts payable 
Check payments 
Cash discounts 


Credit Department 

Accounts receivable 

C.OD.’s 

Collections 




CHAPTER XIII 


MANAGEMENT 


The organization plan is the motivating force in store 
management. But it is possible to have both good plans and 
bad. For many years only those plans were used which had 
proved reliable in the past. Finally, it was realized that study 
and analysis of management problems as applied to store 
activities would allow the formation of new plans, the results 
of which in action could be predicted with astonishing accu¬ 
racy. Hence the planning department has come into being 
as a means of creating and carrying out plans as applied to all 
forms of store activity. 

The Planning Department.—Only the larger stores are 
in a position to maintain a specialized department for making 
plans and studying more efficient methods of carrying out 
present activities. But in each organization there is room for 
an individual whose duty it will be to coordinate and correlate 
store policies and plans. The need of such an individual or 
department is particularly felt in the non-selling departments, 
as selling activities already have been highly developed in 
many cases. 

Planning should be carefully distinguished from research 
activities. Although the two inevitably overlap, research 
activities are generally concerned with merchandise, while 
planning is ordinarily confined to methods. 

The planning department of the Jordan Marsh Company 
is divided into two sections, the creative and the management. 

The creative section consists of: 

1. A Production man who supervises time studies, motion 
studies, standardizing of operations, etc., in other words, 
methods to increase productive capacity. 

2. A System man who investigates systems already in use 
preparatory to standardizing the work. 






150 






MANAGEMENT 


151 


3. An Organization man who makes out charts, prepares 
schedules of work, etc., as called for by the production man. 

The management section supervises methods already in¬ 
stalled, and the work consists of checking production records, 
bonus and salary systems, forms, supplies, etc. 

The functions of the planning department at R. H. Macy 
and Company’s are similar to this, although methods of oper¬ 
ating are somewhat different. In both cases the planning 
departments are in close touch with the store executives and 
all work is done with their full knowledge and approbation. 

Filene’s and R. H. White Company both have planning 
departments, and so do many other firms. 

Planning Department Methods.—The planning man 
should make a preliminary survey of each department under 
consideration, first as a whole and then of the specific sections. 
Both the worker and the work are analyzed. Then each job is 
surveyed and standardized. The workers keep their own 
time and set their own jobs, keeping a journal, however, of all 
activities. The planning department fits the schedules of 
fellow workers together. 

Physical layout of the department is altered to secure best 
results. The clerk at each desk acts as understudy for the 
next one, moving up automatically when a vacancy in the 
department takes place. Salaries are arranged according to 
positions, bonuses according to quantity or by time during 
which standard rate of performance is maintained. 

One of the most important functions of the standardizer is 
a confidential analysis of the departmental management, with 
a view to determining whether the executives themselves are 
capable. The object is to have leaders rather than drivers. 
The Jordan Marsh Company reports that invariably depart¬ 
ments are doing the same work as before standardization in 
much less time, due to simpler methods and increased energy. 

OFFICE MANAGEMENT 

Office organizations differ widely, including, as they do, 
work for all divisions of the store. According to Merrill 
Osgood’s (Jordan Marsh Company) classification, there are 
five different types of office work: 


152 


THE MERCHANTS’ MANUAL 


1. Straight measured production, such as typing, operating 
an adding machine, etc. 

2. A daily schedule job where a clerk does a certain thing 
every day. 


CORRESPONDENCE AND MAILING 

STENOGRAPHIC DEPT. 

PRODUCTION RECORD 

MOR NING 

AFTERNOON 

DAYS 

LET 

NO. 

Time 

START 

TIME 

FINISH 

% 

w 

AMT 

O.K. 

IDLE 

TIME 

EXTRA WORK 

LET. 

NO. 

TIME 

START 

TIME 

FINISH 

ST 

% 

BON 

amt, 

O.K. 

IDLE 

TIME 

EXTRA WORK 

MON 

to 

9'-00 

o:jo 

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TOTAL 

m 

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M. BONUS 

TOTAL 1.40 

P.M. BONUS . t . 

Hk! TOTAL >. *0 

NAME 


TOTAL BONUSTO BE PAID #1.70 

d 

MORNING 

AFTERNOON 

DAYS 

LET 

NO. 

TIME 

START 

TIME 

FINISH 

% 

% 

BON 

AMT. 

O.K. 

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TIME 

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TOTAL 


f.ro M 

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/.ro 

NAME 


TOTAL BONUS TO BE PAID #3.00 


MORNING 

AFTERNOON 

DAYS 

LET. 

NO. 

TIME 

START 

TIME 

START 

% 

BON 

AMT. 

O.K. 

IDLE 

TIME 

EXTRA WORK 

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TOTAL BONUS TO BE PAID // >4~ 

a 


Fig. 28.—Planning of work in stenographic department. 


3. Daily, weekly and monthly jobs, which include mail 
clerks, credit application clerks, ledger clerks, statistical clerks, 
and so forth, A worker will have certain things to do each 




























































































MANAGEMENT 


153 


CORRESPONDENCE AND MAILING DIVISION 
Stenographic Department 
Distribution of Work Scale 


Total No. 

of Letters Class A Class B Class C 

Over 160.80.80 .Remainder 

160.80.80. 0 

Between 140 and 160.70.70 .Remainder 

140.70.70. 0 

Between 120 and 140.60.60. Remainder 

120.60.60. 0 

Below 120.60 .Remainder . () 

Bonus Rules 


No. 

60 

70 

80 


MORNING AND AFTERNOON TYPING 

Errors Allowed 
4 
6 
8 


Bonus Paid 
10 
15 
25 


EXTRA LETTERS 

The amount of letters above a standard amount is held over as a 
credit until the total amount of letters received plus amount held over 
equals or exceeds the net standard amount (Standard amts. 60-70-80). 
When this addition is possible, the bonus for the Next Standard is given 
to the typist. (Amt. held over is to be written in red ink.) 

Example: 

Monday Tuesday Wednesday Thursday 

78—Bonus .15 78—Bonus .25 74—Bonus .25 74—Bonus .15 

Postal Cards and Forms—4 equal one letter 
If total of letters is above 160 

A. This sort of work is to be done by Class C 
If total is below 160 

A. Cards and forms are to be divided among Class A and B 

METHOD OF FIGURING ERRORS 

A. Wrong Name 

B. Wrong capital or small letter 

C. Wrong use of shift key 

D. Wrong story or paragraph 

E. Omitting Future Date if marked 

F. Transposition of letters in a word 

G. Untidy letter, consisting of unclean erasures, poor spacing, uneven 
indentation and alignment 

Errors Which Are Allowable and Not Figured 

A. Wrong punctuation 

B. Misspelled word if misspelled in original 

C. Omitted work if omitted in original story 


Sten. Dept. Head 

1. Report to Div. Mgr. or Asst, before removing a girl from regular work 

for special rush typing work. 

2. Report to Asst. Div. Mgr. each night 

a. No. of absentees 

b. Amount of work held over per girl and total 

Fig. 28a. 























154 


THE MERCHANTS’ MANUAL 


day. For example, quota bonus clerks the first of the month 
figure commissions, then cost of departments, then salary 
cost, and finally quotas. Payments must be made at a cer¬ 
tain time during the month. 

4. Definite task jobs are those where somebody has to do 
certain things each day, such as collect mail or parcels. 

5. Supervisory clerical jobs, excellence in which is depend¬ 
ent upon work obtained from subordinates. 

The Stenographic Department.—The stenographic de¬ 
partment is but a small division of the office force in a depart¬ 
ment store, but it is essential that it function smoothly. 
Therefore, by establishing a schedule of work which must be 
finished on time, efficient results may be obtained. 

Figure 28 illustrates the work of the planning department 
of Jordan Marsh Company in the stenographic department. 
The work has been divided according to the various classifica¬ 
tions. A definite scale of bonus rates has been decided upon, 
totally distinct from salary. Each girl has the opportunity to 
earn something extra every day, as follows: 

65 letters.10 cents 

78 letters.15 cents 

90 letters.25 cents 

This division of the bonus into three separate schedules 
makes it possible for girls to earn something extra when work 
is comparatively light, such as during rainy weather. Each 
girl’s record is posted weekly in graphic form. 

Mail. —The handling of mail is always a vital problem in 
a department store. Mail may usually be classified under 
three headings: 

1. Personal mail. This includes all mail addressed to indi¬ 
viduals or to departments. This mail need not be opened at 
all in the mailing department but grouped together and classi¬ 
fied later. 

2. Cash mail. All mail accompanied by cash falls in this 
category. 

3. Reading mail. All mail addressed to the firm which 
must be read by the mailing department, and then forwarded 
to its proper destination, is here included. 





MANAGEMENT 


155 


1. Personal mail will include, of course, replies to inquiries 
sent out by members of the firm and other executives, and 
a notation requesting answers to be addressed to the individual 
or to the department will aid considerably in reducing lost 
motion in this work. 

When writing for samples or any literature which will 
probably come under separate cover, the correspondent should 
advise the sender to address it as above mentioned, either to 
the individual or to the department. 

In some stores, the policy of the management is against 
having any mail addressed to individuals and there of course 
the above suggestion could not be carried out. Where, how¬ 
ever, there is such a multitude of departments, as in a large 
retail store, it is of much help in expediting the distribution of 
mail to have it addressed to particular individuals or depart¬ 
ments. 

In stores where considerable mail-order business is con¬ 
ducted, the store’s correspondents sometimes assume fictitious 
names so that in the event of any of them leaving the store 
the work can be carried on by their successors without inter¬ 
ruption. For example, the personal shopping bureau main¬ 
tained by Best and Company is in charge of “Dora Meade,” a 
name which remains the same no matter what the real name 
of the correspondent may be. 

2. Cash mail forms a considerable portion of the incoming 
correspondence, and may be subdivided into mail-order cash 
and bookkeeping cash, or payments on account. 

Mail-order cash is accompanied by orders for some specific 
merchandise. The cash can either be retained in the mailing 
department and deposited in bulk, credit being allowed to the 
respective departments furnishing the merchandise, or the cash 
and mail can be sent direct to the departments concerned. 
The procedure in this matter depends entirely on the amount 
of mail and business transacted. 

In both cases, accurate records should be maintained show¬ 
ing the sender of the remittance, the amount received, and 
other necessary details. These records are usually kept in 
an ordinary book or ledger. 

Bookkeeping cash or payments on account are usually ac- 


156 


THE MERCHANTS ’ MANUAL 


companied by a statement. These may be payments in full, 
payments on instalment, payments from which a part of the 
bill has been deducted owing to disputed charges, returned 
goods, etc. 

As with mail-order remittances, bookkeeping money may be 
sent direct to the cashier, to the bookkeeper, or to the depart¬ 
ment concerned, according to the method prevailing in the 
store in question. All cash received should be recorded, how¬ 
ever, both as to sender and as to amount. 

3. Reading mail probably constitutes the most important 
division in the average store. Mail addressed simply to the 



Fig. 29.—Type of return envelope for use of customer. 


firm without any outward form of identification must be 
opened and read by the mailing department, and marked for 
the attention of the person or department concerned. 

Many stores enclose envelopes with their monthly bills 
which are recognized by the mail clerk and sent unopened 
direct to the bookkeeping department. The difficulty with the 
average return envelope is that many customers cast them 
aside and enclose remittances in envelopes of their own. 
Rogers Peet Company use the form of envelope illustrated in 
Fig. 29, its unique character causing the majority of customers 
to use it in enclosing their remittances. 

Special envelopes can be used successfully by the employ- 

















MANAGEMENT 


157 


ment department in writing for references and by the credit 
office in its correspondence, and other departments which sys¬ 
tematically send out matter requiring replies. 

The greater part of the unmarked mail will fall under 
complaints of service or of bills, inquiries, information for 
merchandise, and miscellaneous requests. 

MANAGEMENT METHODS 

The qualifications of a store executive are summed up by 
Wm. Filene’s Sons Company in the following sixteen points: 

1. Planning and organizing the work of his department so 
that it runs as smoothly as possible. 

2. Making sure that the worker knows what his job is and 
what is required of him. 

3. Getting his workers together as a group and giving due 
weight to their opinion in planning work. 

4. When the worker knows his job, holding him to high 
standards and throwing responsibility back upon him. Work¬ 
ers respect the executive who insists upon good work. They 
also wish to have the satisfaction of doing their own jobs well. 
If the workers do not get this satisfaction in their work, they 
will find their interests outside and will do only what is neces¬ 
sary to “get by” on their job. 

5. Setting standards by group action. After the group has 
agreed to the kind of job to be done they will back the execu¬ 
tive in his stand for having the work well done by all members 
of the group. Group discipline is the most effective form of 
discipline. 

6. After an agreement has been reached, following it up 
consistently for a long enough time to see that it becomes a 
matter of habit. Good habits once formed are as hard to 
break as bad ones. Many times, however, a good plan is 
started but allowed to fall into disuse before the habit is 
formed, for lack of executives to follow up. 

7. Letting a worker know when he is “falling down” in his 
work. It is no kindness to pass over poor work, except occa¬ 
sionally when the executive knows that it was caused by 
illness. In correcting mistakes the executive should be careful 
not to nag. 


158 


THE MERCHANTS' MANUAL 


8. Commending good work. People like this recognition. 

9. Absolute fairness. Workers appreciate an executive who 
has no favorites and who does not try to “put anything over” 
on them. 

10. Treating people as human beings. Sympathy in small 
worries should be appreciated, but it should not be carried so 
far as to cause lowering of standards. 

11. Readiness to receive, act upon, and give credit for sug¬ 
gestions made by workers. 

12. Willingness to explain why certain things are done. 
When it is impossible to remedy certain conditions they will 
be less annoying if the workers understand the situation 
thoroughly. The executive should remember, however, that 
he should try in every way to remedy bad conditions. One 
effective method of doing this is through the executive group. 

13. Variety in handling workers. This keeps up interest 
and increases the effectiveness of executive control. 

14. Being careful to hold no prejudice. The future of a 
worker has often been ruined by passing the story of his mis¬ 
take from executive to executive until he had no chance any¬ 
where. 

15. Right placement. Many a worker who is a failure in 
one job may be a great success when working under different 
conditions. The executive who studies his people makes full 
use of this method for'securing both good work and satisfied 
workers. 

16. Resourcefulness in meeting emergencies. This is abso¬ 
lutely necessary to hold the respect of subordinates. 

Manuals.—The first important factor in management is 
the plan which permits an efficient organization. 

The second important factor is the character of the execu¬ 
tive. 

The third important factor is the mechanical method by 
which employees’ duties, rules and regulations are outlined. 
Definite written standards set forth by means of manuals of 
different kinds for different departments or duties permit 
standardization of method. 

In the first place, there are general manuals setting forth 


MANAGEMENT 


159 


rules to be observed by all employees, and other regulations 
applicable to the store at large. 

The rest of the manuals may be divided into three classes: 

1. Office manuals. 

2. Service manuals. 

3. Store manuals. 

All manuals are best formulated after careful study of duties 
and personnel, preferably through the planning department. 
The manual then sets forth the standard practice on each 
point. 

The General Manual.—General manuals are aimed to give 
all members of the store organization the essential rules and 
regulations governing the relations of the management and 
the employees. As it is expressed by Marshall Field and 
Company: 

We wish you to see, back of these rules, our earnest desire to 
conduct this great institution in the most harmonious manner; to 
give you the benefit of long experience; to save you the retracing of 
unguided steps; to enable you to grow in the knowledge of sound 
business principles and thus to become a credit to yourself and to 
the house. 

Although the contents of manuals are not standardized, the 
general rules and regulations are ordinarily much the same, 
the differences consisting of details. The following table of 
contents is arranged in alphabetical order and contains a 
compilation of general rules and regulations: 

Absences. Since punctuality and regularity of attendance are espe¬ 
cially important in retail stores, the manual contains instructions for 
notification in case of absence and statement of penalties for unex¬ 
cused absences. 

Accidents. All accidents should be reported immediately, no matter 
if comparatively slight. 

Bulletin boards and bulletins. Notices for general information are 
posted on bulletin boards and employees are held responsible for 
being conversant with these notices. 

Gare of building. All employees should be careful not to deface 
walls, leave paper or string out of proper receptacles, etc. 

Change of address. All employees are required to report change 
of address or telephone number immediately to the employment 
office. 


160 


THE MERCHANTS’ MANUAL 


Charge accounts. Employees are generally allowed to purchase arti¬ 
cles and charge them for deduction from weekly salary. Ordinarily 
employees must have been working in the store a certain minimum 
length of time. 

Complaints. All complaints from customers should be reported 
immediately to prevent customer’s leaving building dissatisfied. 

Correspondence. Stores generally dislike having employee’s per¬ 
sonal mail sent to the store. 

Department. Social visits are discouraged. The use of last names 
is ordinarily required. Gum and tobacco are barred, as are also lunch, 
candy, or fruit during store hours, except in lunch rooms. 

Direction of customer. Great stress is laid on employees being 
familiar with store layout. 

Discounts. An employee is given a certain discount on all purchases 
for his own use or for that of his family dependent upon him. 

Dress. Women ordinarily wear dark blue or black, with white shirt¬ 
waists during summer months. 

Elevators. Employees are usually subject to certain restrictions, 
concerning use of elevators during business hours. Executives, heads 
of departments, buyers, and section managers are usually excepted. 

Entrances and exits. Ordinarily entrances and exits are denoted 
for store employees’ use, to avoid congestion at doorways used by 
customers. 

Group insurance. If group insurance is in force, provisions are 
usually set forth in the general manual. 

Hospital. All employees who feel ill are supposed to report to the 
hospital for permission to leave or treatment. 

Hours of business. A statement of hours with special provision 
for women and children, the time employees must be in departments, 
summer closing policy, etc. 

Leaving department. Permission must ordinarily be secured from 
floor manager. 

Legal aid. Some stores provide free legal service for employees 

Locker rooms. Provisions for locker rooms differ with the store. 

Lost and found. All lost and found articles must be taken or 
reported immediately to the accommodation place or wherever such 
articles are held for claiming. 

Lunch hours. 

Mutual benefit associations. Rules and regulations for membership 
are-given in case such a service exists. 

Passes. The head of the department grants passes to all employees 
desiring to leave for any reason other than regular lunch hours. This 
includes sick passes, shopping passes, and after-hour passes. 

Payment of wages. The manual usually states time and method 
of payment. 

Rest rooms, restaurants, smoking rooms, etc. Directions and de¬ 
scriptions usually appear in the manual. 


MANAGEMENT 


161 


Shopping hours for employees. 

Sponsors. In some stores sponsors for new employees are appointed. 

Telephone. Employees usually are required to use specially desig¬ 
nated pay telephones for personal calls. Directions for answering 
other telephones are given. 

Theft. Directions in case of apprehended or actual theft are in¬ 
cluded. 

Time. Instructions for registering time are given in almost all 
cases. 

Umbrellas. In some stores umbrellas are rented to employees for 
a nominal sum. 

Vacations. Rules and regulations as to vacation privileges are 
included in all general manuals. 

Washrooms. Locations of various washrooms are given. 

Office Manuals.—Manuals for office workers are not gen¬ 
erally made up, the general store manual being regarded as 
sufficient. If such a manual were compiled, the following 
headings might be used: 

Explanation of store policies. 

Employment regulations. 

Office hours. 

Deportment rules. 

Payment and bonus regulations. 

Intercommunication systems. 

Mail handling. 

Office equipment, including files, adding machines, etc. 

Correspondence. 

Filing. 

Special routine. 

Supplies. 

Forms. 

Miscellaneous. 

Service Manuals.—The principal services to customers 
requiring manuals are deliveries and elevators. Delivery 
requirements have already been treated in the chapter on that 
subject. 

Manuals for elevator employees will serve as a model for 
service manuals. The aim, naturally, is to produce a represen¬ 
tative of the store who will impress the customer most favor¬ 
ably. The following provisions will be found in the majority 
of elevator manuals: 


11 


162 


THE MERCHANTS’ MANUAL 


1. Conduct and bearing. An erect military bearing is emphasized. 
All joking with passengers is barred. Whistling, chewing gum, etc., 
is not permitted. 

2. Courtesy. Courteous answers to questions in an agreeable and 
pleasant tone of voice are specified. 

3. Hours. Allocation of hours is naturally very important. 

4. Location of merchandise. Although the customer has the oppor¬ 
tunity to consult the store directory, she frequently prefers to ask 
the elevator operator. Consequently he is supposed to know location 
of departments throughout the store. 

5. Methods of expression. Ordinarily, manuals give form of direc¬ 
tions, such as “Take the next car, please,” “Step well back in the car, 
please,” etc. Floors should be called out and their general character 
enunciated clearly. 

6. Operation of cars. Careful direction is given as to closing doors, 
making smooth landings, carrying capacity, care of car, etc. 

7. Personal appearance. Personal appearance is stressed in all cases. 
Cleanliness as to person and as to uniform, shoes, etc., is required. 

In some stores, telephone manuals are prepared, giving form 
of answering, care of patrons, delivery of messages, transfers, 
etc. 

Store Manuals.—Manuals in the selling departments are 
naturally more common and more detailed than anywhere 
else in the store. Not only are manuals prepared for officials 
and salespeople but also for general use in special depart¬ 
ments. The mere skeleton is given here as more detailed 
treatment will be found in later sections under merchandising 
and personnel: 

1. The Assistant Buyer’s Manual. General contents are 
varied, depending on duties assigned in different organizations. 
Following are some important subjects: 

Duties. 

Stock plans. 

Stock sheets. 

Merchandise policies. 

Inventories. 

Comparisons. 

Stock and purchase records. 

Receiving and marking room procedure. 

Miscellaneous. 

2. Department Manuals. For the guidance of salespeople, 
and others concerned, some stores have special manuals for 


MANAGEMENT 


163 


different merchandising departments. These have been found 
very valuable in standardizing procedure and preventing over¬ 
lapping between two departments. For example, such man¬ 
uals would contain: 

Full description of stock carried. 

Materials, their purpose, use, etc. 

Sizes and styles. 

Colors. 

Workmanship. 

Store policies in regard to such merchandise. 

Manuals of this sort would require periodical revision in 
some departments, while in others they would remain as 
standards for a considerable period of time. 

The bargain basement frequently requires a special manual, 
describing sales policies, methods of mark-downs, restriction 
of services, etc. 

3. Manuals for salespeople. There are several varieties 
of sales manuals in use, but the most ordinary form describes 
in detail the process of making out different kinds of sales- 
checks. These manuals are intended to be kept by the em¬ 
ployee at all times and consulted when necessary. 

Manuals of cash register instructions are desirable where 
cash registers are used to any great extent. 

4. Section managers’, aisle managers’, or floor managers’ 
manuals. The floor manager is the representative of the man¬ 
agement and in ordinary cases exercises a purely managerial 
supervision both as respects the department employees and the 
store’s customers. Hence the manual sets forth specifically 
the responsibilities of the position, the duties attached, and 
the exact jurisdiction. 

STORE MANAGEMENT 

Methods of supervising and managing the different depart¬ 
ments vary with the particular store in question. The buyer 
and the assistant buyer are nominally in charge, but their 
duties are primarily with the merchandise. Hence the average 
store employs what is variously termed, aisle manager, section 
manager, floor manager, etc. While he works in close coopera¬ 
tion with the buyer his duties are concerned with linking up 


164 


THE MERCHANTS' MANUAL 


store service and discipline, and he is usually under the direct 
control of the superintendent. 

The Floor Manager.—There was a time in the history 
of retailing when the position of floor walker meant little 
more than an individual who directed customers pleasantly 
to the particular department where they wished to go. The 
modern floor manager, however, is usually considered as a 
minor executive possessed of tact, patience, and never-failing 
courtesy towards customers and the ability to supervise with¬ 
out creating friction. As James T. Chase, Superintendent of 
the Gilchrist Company of Boston, says: 

The one requirement which the floor manager must meet to be 
successful is to assume all the responsibility that is placed upon him. 
He must understand human nature, and he must make the customer 
believe that she is personally supervised all the time she is in the 
store, and that her most minute wants are being zealously cared for. 

The floor manager is the managerial middleman. There 
has been much discussion as to whether or not he could be 
eliminated. Consequently, the decision of James McCreery 
and Company to do away with floormen has been watched 
with much interest, although without any decided tendency to 
adopt the same plan. According to the McCreery method, the 
duties and responsibilities of the floorman are divided between 
the assistant buyer and the salespersons with highest sales 
records, who are given the title of sponsors. But whether the 
floorman himself is done away with or not, the duties still 
remain. These may be classified under three general heads: 

1. Service to customers. 

2. Supervision of employees. 

3. Care of department or section. 

Service to Customers.—The floor or aisle manager rep¬ 
resents the firm in its policy of service. He is responsible for 
the behavior to customers of the salespeople in his depart¬ 
ment, for the carrying out of promises, and for the making 
of simple adjustments. In case the complaint is serious, the 
customer is usually sent to the adjustment department. In 
few cases is the floor manager allowed to tell the customer 
that no adjustment is possible. As one manual says: 

The store desires that every courtesy be shown to customers. If 


MANAGEMENT 


165 


UB(r ANSWER 

Aisle Mana 



QUESTIONS 

191^?... 

y Report to Sup’t 


You arc required to fill in this form correctly and have same 
at 8uperintendcnt’s/3ffice not later than 8.30 a. m. dally. 

F1 oo,....o?.X.. w .. 

- 3 ^ 




Dept’s 

Names and Dep’t of Salesperson 
.... 


StOckkeepers absent 




. 




. 

Names and Dep’t of Salespersons or Stockkeepers late 


Condition of Window Shades. 

Any fixtures in need of any repair?.. 

Any show case not in proper condition?....^.. 

Any glass need cleaning?. 

Number and letter of any arc lamp that needs trimming ^ 


Was advertised Mdse., on sale and properly displayed? 


REMARKS AND RECOMMENDATIONS 



Signature 


Fig. 30.—Aisle manager’s report. 




































166 


THE MERCHANTS’ MANUAL 


a request is made which you cannot fill personally, get in touch with 
the Head Floor Manager before refusing the customer or sending 
•her away from the department. 

Supervision of Employees.—The discipline of the depart¬ 
ment is entrusted to the floor manager, and he interprets all 
orders issued to employees, and is responsible for having 
them carried out. He cooperates with the employment and 
educational departments in training employees and reporting 
their progress. 

The floor manager takes time of salespeople, reports ab¬ 
sentees, arranges lunch hours, and sees that dress regulations 
are complied with. He observes shopping rules for employees 
and instructs new employees in special routine of the depart¬ 
ment. 

Either the floor manager or someone as his substitute must 
be present every minute of the day. Marshall Field and 
Company lays special stress upon preventing all appearance 
of “getting ready to go home” before the last customer has 
left and places the responsibility for this upon the floor 
manager. 

Care of Department or Section.—The care of the depart¬ 
ment includes protection against fraud or theft and also guard¬ 
ing of merchandise and store properties. 

The floor manager should see that covers are off merchan¬ 
dise, folded, and put away before the store opens. He should 
inspect each section thoroughly every morning and report 
anything out of order. He also controls lighting and ventila¬ 
tion. 

Figure 30 shows the form of aisle manager’s daily report to 
the superintendent of Saks and Company, of New York. The 
form used by Best and Company is still simpler, consisting 
merely of a slip of paper headed Aisle Manager’s Report with 
the following notice at the top: 

Every complaint, criticism, unnecessary delay, or failure on the 
part of our service to give entire satisfaction is of interest to the 
firm, and should be reported. Also you will please report any daily 
occurrences that you think will be of interest or value to the firm. 

The weekly report of the section managers of R. H. Macy 
and Company is more pretentious. See Fig. 31. Much more 


MANAGEMENT 


167 


Form 995 2M 7-17 B429 

WEEKLY REPORT OF SECTION MANAGERS 

This report is for the information of the Manager so these 
questions must be answered with scrupulous exactness. The 
report must be left at the Manager’s Office every Friday eve¬ 
ning at 6 o’clock. 

1 Are there any incompetent sales people in your departments?. 

If so, give names. 

Are there any incompetent parcel clerks in your departments?. 

If so, give names. 

Are there any incompetent stock people in your departments?. 

If so, give names. 

2 Do any sales people on your floor require instructions as to system?.... 

Do any sales people on your floor require instructions as to sales¬ 
manship? . 

3 Are there more people in your departments than you think neces¬ 
sary? . 

4 Have you any complaint to make about delivery service that requires 

special attention from the Manager?. 

If so, state facts fully. 

5 Has any delay in return of cash or Charge Checks through the tubes 

been reported to you?. 

If so, mention the day, the hour and the amount of delay. 


6 Has any merchandise been missed from the counters or fixtures?. 

7 Has any cash been lost?.. 

8 Are the stocks in the departments under your supervision in as good 

condition as they should be?. 

9 Do you make it your business to see that all employees under your 

supervision deposit waste paper and rubbish in bags provided for that 
purpose?. 

10 Have all goods been properly covered and display fixtures been in 
proper place before leaving every night of the past week? If not, 
what nights were the exceptions?. 

11. Is there any broken glass that has not been repaired on your floor? 

.If so, where?. 

12. Do any counters or fixtures require repair?.If so, 

which?... 

13. Does the floor or case lighting in your departments require attention? 

If so, where?. 

14. Are there any surplus signs or stands in your sections?.. 

15. Are there any personal belongings of employes in your sections?. 

16. Have you any suggestions to make?. 


17. Above statements refer to Depts 


R. H. Macy and Company. 


Signature of Section Manager. 
Dated., 1917. 


Fig. 31.—Report of Section Manager. 



































168 


THE MERCHANTS' MANUAL 


attention is paid to physical details such as display fixtures, 
broken glass, counters out of repair, surplus signs or stands, 
etc. 

In each case suggestions for improvement are invited. 

Protection of the store is a vital part of the floor mana¬ 
ger’s duties, the major points of which are included in the 
following instructions: 

1. Identify your charge customers. 

2. Give no discount unless you are sure the customer is 
entitled to one. 

3. Watch for shoplifters. The quickest way to get a store 
detective is to call the information desk. 

4. Examine sales slips given you to sign. 

5. Supervise your section closely. 

6. Be the first person in your section in the morning and 
the last person to leave at night. 


CHAPTER XIV 


FINANCE 

The dry goods store belongs to that class of business enter¬ 
prise known in stock market circles as “industrials.” It re¬ 
sponds quickly to general business conditions, whether these 
are good or bad. From the public investing standpoint, the 
dry goods store, like all other business enterprises, involves a 
greater amount of risk than properties secured by first mort¬ 
gages. Although sound mercantile judgment may safeguard, 
perhaps, against severe losses, it cannot entirely avoid the 
reverses incident to profound depression in general business. 

The capital of a retail store consists mainly of inventories, 
accounts receivable, fixtures and equipment, and good will. 
The first two are constantly fluctuating in accordance with 
sales policies and business conditions. Thus the financial 
prospects of a retail store are often dependent on an accurate 
prediction as to coming prosperity. 

The only remedy for this condition is a financial policy for¬ 
mulated to provide sufficient cash and credit reserves to tide 
the store over the period of falling prices when inevitable in¬ 
ventory losses must be sustained. The person in charge of 
the store’s finances should be possessed of sufficient vision to 
foresee future possibilities and so correlate all its activities 
that depression may be met safely. 

Financing may be done either internally, through use of the 
store’s own funds and credit, or externally, through the issue 
of securities. 

Internal Financing. —By far the greater part of all retail 
financing is done internally by one of the following methods: 

1. Current funds. 

2. Banks. 

3. Manufacturers’ and jobbers’ credit extension. 

These methods are particularly adapted for use by the small 
169 


170 


THE MERCHANTS' MANUAL 


store, to which the offering of stock publicly is made impos¬ 
sible by size, stability, or other limitation. 

Current Funds.—The majority of stores which are success¬ 
ful today financed themselves in the beginning out of earn¬ 
ings. Expansion is only deprived of excessive risk when there 
is sufficient capital to provide for current expenses. Expan¬ 
sion based on borrowed money is an excessive risk for the 
small store, the reserve power of which is incapable of stand¬ 
ing any extraordinary financial strain. It increases overhead 
and interest charges, whereas the store expanding on a sound 
basis of earnings can do so with the minimum of risk. 

Banks.—As a general rule, bankers are willing to accom¬ 
modate merchants who maintain good cash balances, and can 
show statements in which the sum of current assets (merchan¬ 
dise on hand, accounts receivable, and cash in bank) is at least 
twice the amount of current liabilities. The rate of interest on 
such loans varies not only with the demand and supply of 
money in the market, but also with the financial resources of 
the borrower. After the loan is secured, usually upon a 90- 
day basis, it is advisable to maintain an average daily balance 
in the bank of approximately 15 to 20 per cent of the maxi¬ 
mum amount the bank will lend. 

There is an obligation, not written, but moral, on the part of 
the merchant to pay off bank loans at least once a year, demon¬ 
strating his ability to operate without assistance from the 
banker under normal conditions. If more than one bank is 
used for deposits, a line of credit may undoubtedly be ob¬ 
tained from each, in which case the full line of credit should 
not be used at all banks at the same time. Thus any sudden 
demand upon the merchant for payment of demand loans or 
refusal to renew a loan would not find him unable to meet the 
emergency from his other banking resources. 

In addition to the ordinary banking facilities, borrowing 
may be done through what is known as “commercial paper.” 
Unlike the ordinary note of a merchant, this is a negotiable 
instrument which may be bought and sold in the open market 
through the medium of brokers specializing in this type of 
instrument. A fraction of one per cent is charged for commis¬ 
sion (usually y 4 of 1 per cent) which must be included when 


FINANCE 


171 


comparing the cost of commercial paper with that of ordinary 
banking paper. Thus, if money is cheap and commercial 
paper can be sold on a four months’ basis of 4*4 per cent, 
with a 14 per cent commission, and bank loans may be had at 
5 per cent, the advantage lies with the bank loan because the 
actual cost of the commercial paper is 4% per cent, plus 
% per cent (per annum), or 5% per cent, as compared with 
the bank rate of 5 per cent. 

The cost of commercial paper varies also with the size, 
prestige, and credit standing of the establishment. Gener¬ 
ally, commercial paper can be sold only by stores with first- 
class credit rating. The prompt payment of every note as it 
comes due is an essential. It is not possible to renew the obli¬ 
gation as in the case of bank loans. 

The most frequent occasion for a merchant’s calling upon 
a bank for credit is to make payment for extra-large pur¬ 
chases—in other words, to finance inventory. Samuel W. 
Reyburn, president of Lord and Taylor, New York, says, in 
regard to the position of the banker when called upon by the 
retailer for a loan, that 

The banker buys and sells credit. An investment banker buys and 
sells stocks and bonds, capital securities, but in a broad sense, they 
are only credits. A commercial banker, on the confidence people 
have in him, takes care of the liquid capital or ready money, his 
deposits. They are bought just as surely as merchandise is bought, 
are due on demand, or on a period of short notice. Sound financing 
requires that such funds shall be invested in commercial loans such 
as a note or short-time acceptance drawn against business trans¬ 
actions or short-time securities of the government, or on collateral 
loans. 

Manufacturers’ and Jobbers’ Credit Extensions. —Many 
small stores have succeeded in making arrangements with 
manufacturers who were willing to advance money, or stocks 
of merchandise on a consignment basis, under which the mer¬ 
chant had opportunity to do business without the necessity of 
investing his own inadequate capital. Favors like this can¬ 
not ordinarily be asked for by the larger establishments, 
although it is undoubtedly true that many buyers still obtain 
goods on a consignment basis. 


172 


THE MERCHANTS’ MANUAL 


Another comparatively recent development is the special 
financing of deferred payment sales. The competition of stores 
selling furniture and musical instruments on the instalment 
plan has forced many establishments into selling this class of 
merchandise on a much longer time basis than ordinary credit 
rules will permit. This has led to the custom of accepting 
merchandise on a much longer time basis than ordinary credit 
chattel mortgages from the purchaser which may be dis¬ 
counted. With the advent of the automobile, the business of 
discounting this character of paper has grown so large that 
many institutions have sprung up dealing exclusively in 
chattel mortgages. 

It is to such institutions that the merchant may take his 
chattel mortgages and obtain the capital he needs, although at 
a rather substantial discount. Obviously the financing which 
must be done with the assistance of the manufacturer, or 
through the discounting of the consumers' paper, is by no 
means the most attractive method of providing capital for a 
growing business. 

Planning for Financing Requirements.—Whether the 
establishment be large or small, the keen business man will 
plan his financing at least 6 months ahead, just as modern 
retailing methods demand he plan his merchandising. Ex¬ 
perience tells him from his records that purchases, sales, cash 
receipts and disbursements bear certain definite relationships 
each to the other. This obviously differs in every business, 
depending upon the proportion of cash sales to charge sales 
and upon the customary procedure followed in the discounting 
of bills. Figure 32 shows a table which is typical of a financial 
estimate sheet which may be successfully applied in a retail 
business. 

It will be observed that the figures to be inserted under 
Item 3 indicate the amounts which it will be necessary to bor¬ 
row to maintain the required cash balance. They are ob¬ 
tained by ascertaining the difference between the total esti¬ 
mated receipts and disbursements. Whenever in any month 
the receipts equal or exceed the disbursements no borrowing 
is necessary unless there are notes payable due in that month. 
Experience with the use of this table will greatly improve its 


FINANCE 


173 


FINANCIAL ESTIMATE 
RECEIPTS 




Jan. 

Feb. 

Mch. 

Apr. 

May 

CD 

a 

►”5 

July 

Aug. 

Sept. 

Oct. 

Nov. 

Dec. 

1 

Accounts 

Receivable 

Estimate 

Actual 













2 

Cash and 

C.O.D. Sales 

Estimate 

Actual 













3 

To be 

Borrowed 

Estimate 

Actual 













4 

Miscellaneous 

Receipts 

Estimate 

Actual 













5 

TOTAL 

Cash Receipts 

Estimate 

Actual 














DISBURSEMENTS 


6 

Merchandise 

Purchases 

Estimate 

Actual 













7 

Taxes 

Estimate 

Actual 













8 

Rent 

Estimate 

Actual 













9 

10 

Variable 

Expenses 

Estimate 

Actual 











• 


Notes Due 

Estimate 

Actual 













11 

Extraordinary 

Disbursements 

Estimate 

Actual 













12 

TOTAL Cash 
Disbursements 

Estimate 

Actual 













13 

Required Cash 
Balance 

Estimate 

Actual 














Estimate based on sales increase (or decrease) per cent as planned. 
Purchases based on increase (or decrease) per cent of the plan. 


Fig. 32.—Suggested estimate sheet. 






















































































174 


THE MERCHANTS’ MANUAL 


accuracy. To make it work practically the policy should be 
maintained consistently throughout the period either of allow¬ 
ing bills to run their full time or of discounting them. A 
financial plan prepared six months in advance, if based upon 
conservative sales estimates, is certain to make financing 
easier for the executive. This table also warns that the dan¬ 
ger point has been reached whenever it indicates a total bor¬ 
rowing near the maximum amount he may borrow in bank 
loans and commercial paper. When this condition has been 
reached it is necessary to consider other means of external 
financing to remedy the deficiency in capital. 

External Financing.— The recent tendency toward external 
financing in retail stores has developed not only because of 
the needs of the businesses themselves but for another im¬ 
portant reason. Owners of some of the larger stores have 
acquired sizable estates through the profitable operation of 
their establishments, and a substantial part of their invest¬ 
ment holdings are the stocks in their own companies. When¬ 
ever the merchant has his personal holdings almost exclusively 
confined to the investment in his store and the stock is held 
closely, the present inheritance tax law may place his estate 
in the position of being compelled to sell to the public a sub¬ 
stantial part of a close corporation stock to meet these taxes. 
With no market already created for the stock at the time of 
the death of the owner, a real problem presents itself to the 
executors of the estate. This has led many merchants to re¬ 
finance their businesses in such way as to provide a market 
for their stocks while they live, so that at the time of death 
no sacrifice of the stock is necessary in a market unfamiliar 
with the security and its earning power. 

In the preparation of a plan of external financing the advice 
and assistance of investment bankers and brokers is invaluable 
in the determination of the best form of security to be is¬ 
sued. Also, certified public accountants of recognized stand¬ 
ing should be called in, not only because their certification of 
the correctness of the financial statement is a distinct advan¬ 
tage in itself, but because their wide experience and expert 
accounting knowledge is at the disposal of the merchant in 



FINANCE 


175 


the preliminary planning, as well as in the preparation of the 
financial prospectus. 

With the banker and auditor to assist him, a merchant may 
be reasonably certain that he is not in danger of assuming 
an obligation which will be too heavy a burden upon his busi¬ 
ness. Nor should he make the mistake of marketing an issue 
either of bonds or of stock in an amount too small to meet 
the maximum financial requirements. If, in the opinion of 
the investment banker and of the auditor, sufficient capital 
cannot be obtained through the marketing of present securi¬ 
ties, the conservative merchant must revamp his plans for 
expansion to meet his financial needs. A business may occa¬ 
sionally fail even though its principals are men of experience 
and ability in merchandising, simply because of insufficient 
capital for the volume of business produced. 

The form of external financing to be adopted must depend 
largely upon the character of the business, its financial con¬ 
dition, and the assets against which securities may be issued. 
These securities may be offered in the form of common stock, 
preferred stock, bond issues, notes, or debentures. 

Common Stock. —Until recently common stock issues in 
the retail field were comparatively rare. Since the common 
stock takes practically all the risk as well as the largest part 
of the profits, it is usually held closely by the principal 
owners. Being speculative in character, its sale to the public 
is usually made upon the basis of its earning power. Except 
in the case of very large corporations, no great amount of 
common stock may be distributed publicly without the danger 
of losing the controlling interest. It is, therefore, not nearly 
so popular a form of financing as the preferred stock issues, 
although the Associated Dry Goods Corporation, the May 
Department Stores, R. H. Macy and Company, Gimbel 
Brothers, The Fair, and others have offered common stock 
issues for public investment. 

Preferred Stock. —The preferred stock issue presents many 
important advantages: 

1. It permits a widespread distribution of stock in small 
lots among persons whom the store desires to interest as 
patrons as well as stockholders. 


176 


THE MERCHANTS ’ MANUAL 


2. Even though payment of dividends may be cumulative, 
the penalties attached to the failure to pay dividends are not 
so drastic as when interest payments on bonds or notes are not 
promptly met during times of business stringency. 

3. The annual rate of redemption of the stock may be fixed 
as low as 5 per cent, or even 3 per cent, of the total original 
issue. 

4. Its inclusion in a balance sheet does not present the dis¬ 
advantages inherent in a bond or note issue, because it ap¬ 
pears under nominal liabilities, while bonds appear as a direct 
obligation of the corporation or partnership. 

5. Preferred stock may be issued in a larger proportion of 
the total existing assets of a concern than is possible in the 
case of a bond issue. 

6 . From the point of view of the purchaser, the stock is 
usually free of all property tax in the state of issue, and its 
dividends are not subject to the normal income tax. 

7. Its yield is 7 or 8 per cent, rarely less than 6 per cent; 
this is higher than the yield of first-class bonds. 

8 . The protective features are such as to make it a most 
attractive investment. 

Bonds.— Since the earning power of the retail store is not 
constant, bond issues are not ordinarily offered because of the 
desirability of avoiding fixed charges, in so far as possible. In 
some cases, however, assets may be large enough and per¬ 
manent enough in character to warrant floating a bond issue. 

Mortgage bonds of the better grade are most frequently 
used by merchants for the financing of building operations or 
for the purchase of real estate and buildings. Bankers and 
brokers selling these bonds usually require that the bond issue 
shall not exceed 50 per cent of the sound value of the assets 
behind the issue. This form of financing often is resorted to 
when the stock market is in a state of uncertainty or depressed 
prices, and when preferred issues cannot be so readily sold 
except at prices substantially under par. At such times bond 
prices are relatively higher because of their greater security. 
Thus, despite the obvious advantages that stock issues possess, 
bonds may be more readily marketed then. 

Then, too, interest rates on bonds are generally lower than 


FINANCE 


177 


the dividend rates on preferred stocks. The interest on the 
bonds is a deductible item in the Federal income tax return as 
a part of the operating expense, while dividends are not. 
Bonds are a prior lien only upon the assets or property against 
which they are issued, unless specifically provided otherwise 
in the deed of trust. By the creation of a separate corporation 
for the specific purpose of purchasing realty and constructing 
buildings, the bond issue may be entirely eliminated as a direct 
obligation of the parent company, and thus need not appear 
on its balance sheet in the form of “bonded indebtedness.” 
The redemption of bonds may be arranged to fall due at such 
times and in such amounts as will work the least hardship 
upon the financial reserves of the establishment. 

For example, a store may finance the purchase of a building 
by issuing bonds, let us say, for $600,000 on a million-dollar 
building. It desires not to impede its growth by taking out of 
each year’s earnings too large an amount for the redemption 
of bonds. It may arrange for an amortization each year of 
only $20,000, over a period of 15 years, the usual life of a 
bond issue, and leave an amount of $300,000 to be paid in a 
lump sum at the end, or to be refinanced at that time with a 
new issue. This is sometimes called a “stub-end” issue. 

Maturities of bonds need not be in the form of fixed annual 
sums, but may be arranged on a sinking fund basis under 
which such amounts may be called each year as the finances 
of the company will permit, so that if unusual good fortune 
favors the new venture, the bonds may be paid off earlier than 
the plans contemplated. A bond issue should never be under¬ 
taken with the redemption so large that the annual fixed 
charge will absorb the entire net earnings. Something must be 
left for expansion. 

There is another form of financing that is so rare in retail 
circles that it needs only summary mention. It is the de¬ 
benture. This is simply a form of note issue like a bond but 
having back of it only the obligation to pay and such assets 
as are not otherwise absorbed by prior bond issues, or other 
liens. It is seldom used except for emergency financing. 

Public Distribution of Store Securities.—The present 
recourse of large retail stores to the public for funds has 
12 


178 


THE MERCHANTS’ MANUAL 


caused much comment. Decision to offer stock publicly has 
been ascribed to the following reasons: 

1 . To create direct interest in the store by the public. In 
the case of a department store this motive might appear 
doubtful, since the potential investors would never equal a 
tithe of the actual customers. 

2. Financial rearrangements due to taxation requirements. 
By the issue of bonds or notes, interest paid on these mortgage 
issues may be deducted in calculating the Federal income tax. 
Furthermore, if present preferred stock issues of department 
stores can be construed as mortgage liens, the same advantage 
would accrue. 

3. A change of policy. When the department store is, as in 
many cases, undercapitalized, it has been realized that a more 
adequate capitalization, in relation to earning power, is neces¬ 
sary. The value of capital as a basis of credit is, in this way, 
utilized. 

Securities may be distributed in the following ways: 

1. Direct offering to present stockholders. This is the gen¬ 
eral method employed when desiring to keep control in the 
family or among a few individuals. 

2. Underwriting. By placing the responsibility for floating 
the stock, bond, or note issue with a well-known financial 
house, the store insures having the issue successfully sold, 
and having the funds on hand at a certain time. In addition, 
the acceptance of this stock issue by the brokerage house 
gives confidence to the public that the values behind the issues 
are sound. 

Some department and dry goods stores are not in a position 
to take advantage of underwriting services because of their 
local character, while the New York, Philadelphia, Chicago, 
or other large city store might resort to such methods of 
financing because they are generally well known throughout 
the country. 

3. Direct distribution of stock by the company, either to 
the general public or to employees, or both. 

It is difficult and sometimes impossible to finance satisfac¬ 
torily a store which has been doing business for several years 
without profits. All underwriters demand statements of assets, 


FINANCE 


179 


liabilities, and income accounts over a period of years, signed 
and certified by reliable accountants. In addition, the presi¬ 
dent of the store makes a general statement, giving a brief 
history of the corporation, its policies, present condition, future 
prospects, and the purpose of the issue. 

The importance of the prospectus should not be underesti¬ 
mated. As a matter of fact, the statements it is necessary to 
make to the public are hardly different from those required 
by the banker in private financing arrangements. The depart¬ 
ment store prospectus should always contain the following 
information, detail depending somewhat upon how well the 
store is known: 

Nature of the business. 

Fundamental policies. 

Management. 

Past earnings. 

Inventory profits and losses. 

Present financial condition, including balance sheet and income 
account over a period of years. 

Reason for the issue. 

Growth. 

Provisions and security for the issue. 



CHAPTER XV 


INSURANCE* 

The retail dry goods store, whether large or small, has a 
major problem to meet in deciding on its insurance require¬ 
ments and methods of filling these requirements to the best 
advantage. Protection is absolutely essential since an unin¬ 
sured loss may mean absence of profits or even failure. 

It is impossible in one chapter to cover in detail the insura¬ 
ble items to be found in the retail store. The store itself, the 
fixtures, the delivery wagons and trucks, the merchandise, the 
machinery, the loss of profits, the liability imposed by law 
for injuries sustained by the public or employees upon the 
premises, are all to be considered in drawing up an insurance 
program. In addition, there are many forms of special insur¬ 
ance which may prove desirable under special circumstances. 
Use and occupancy, goods in transit, parcel post, and bonding 
are fair examples of special insurance problems. 

The Broker. —Insurance is an intricate subject. It does 
not lend itself to easy comprehension on the part of the busi¬ 
ness man who is occupied with other problems. Therefore, the 
advice of the broker is not only important from the viewpoint 
of proper coverage, but of details of insurance procedure. 

In dealing with an insurance agent, the store deals with the 
representative of the insurance company whose profits depend 
upon the profits of the company. In the case of the broker, 
the reverse is true. The broker is the agent of the assured 
and his earnings are dependent on the value of his services, 
not to the company, but to the assured. 

A broker should be chosen because of his honesty, his con¬ 
scientiousness, his knowledge of the business, and his interest 
in the client’s needs. 

* The manual on Insurance, by the Controllers’ Congress of the 
National Retail Dry Goods Association may well be consulted, in 
conjunction with this chapter. 


180 


INSURANCE 


181 


The Insurance Company.—The choice of a company in 
which to insure is another point which should not be left to 
chance. The question of rates is subordinate to the all-impor¬ 
tant point of whether the company is able to pay in case of 
a loss. An insurance company may be judged by its net 
assets, its loss-paying record and its general reputation. In 
a large store it is advisable to distribute risks up to three 
companies, but not more because of the necessity of an 
adjuster in case of loss where more than three companies are 
involved. 

Insurance companies may be stock, mutual or reciprocal. 
The stock company has certain paid-in capital, certain cash 
reserves, and rates which have been established after long 
experience. The best stock insurance companies cannot be 
excelled for safety of protection. 

In case of mutual insurance, the various members assume 
their own and their associates’ risks. Brokers’ expenses and 
dividends are done away with, while any surplus after payment 
of losses is distributed among the members. In case of exces¬ 
sive loss, however, there is a contingent liability upon each 
member to pay his share of the loss, which may amount to 
many times the original premium. In the stock insurance 
company the assured merely pays the initial premium. 

The main difference between the mutual and the reciprocal 
company is that the former requires an initial premium equal 
to or greater than that of the stock company, while the recip¬ 
rocal takes a certain advance premium plus a note for the 
remainder and the contingent liability. 

The Insurance Policy.—An insurance policy consists of 
three parts, the standard printed form, the rider or riders 
and the endorsements. While there are differences due to 
state regulations and the type of insurance, the main features 
are ordinarily the same. 

The liability of the insurance company is limited to the 
sound value of the property in case of loss or damage by fire. 
This means replacement value at the time of the fire less 
depreciation, however caused. In the case of liability insur¬ 
ance, definite limits are set. 


182 


THE MERCHANTS’ MANUAL 


Fraud or misrepresentation of a material nature will void 
the policy automatically. 

Certain risks are not covered, notably fire loss caused by 
invasion, insurrection, riot, civil war or commotion, military 
or usurped power, order of any civil authority, theft of prop¬ 
erty at time of fire, etc. 

The assured must use all reasonable means to protect prop¬ 
erty damaged by fire. 

There are certain specifications of ownership, such as state¬ 
ment of mortgage or existing lien, building on leased ground, 
assignment, etc. 

Certain special hazards are ordinarily excluded, such as me¬ 
chanics making structural changes, vacancy for more than a 
certain length of time, lightning, explosion, gasoline or kero¬ 
sene on premises, etc. 

While many of these conditions are offset by special clauses, 
it is always necessary to be sure of this because in case of a 
loss the terms of the policy will regulate the settlement. 

Procedure in Case of Loss.—All insurance companies 
require immediate notice of loss or accident in writing. As 
previously mentioned, the assured must protect property from 
further damage. This includes separation of damaged from 
undamaged property, removal elsewhere if necessary, and 
arrangement in best possible shape. 

Proof of loss must be filed within sixty days. Even if ad¬ 
justment has not been made, proof of loss must be filed to pre¬ 
vent forfeiture of rights. It has been held repeatedly that 
even the statement of the insurance agent that such filing was 
not necessary does not invalidate the policy provision. The 
proof of loss contains a statement of insurable interests, other 
policies, and a summary of damaged property. The whole 
must be executed by the owner, partner, or corporation official. 

The insurance company has the option of paying for the 
property at its appraised value, or of repairing, rebuilding, or 
replacing with other similar property. This option must be 
exercised within thirty days after filing of proof of loss. The 
option can be exercised by the insurance company alone and 
not by the assured. 

Payment of loss is required within sixty days, although it 



INSURANCE 


183 


is usually paid in a much shorter period. The assured cannot 
sue the company unless all conditions have been complied 
with, and in no case after twelve months from the date of loss. 
If a third party is liable for the damage, the insurance com¬ 
pany, by what is called the subrogation clause, receives the 
right to proceed and recover against this third party in place 
of the assured. 

The Rider and the Co-insurance Clause.—The standard 
rider form describes the property to be insured in detail, con¬ 
tains privilege clauses and warranties, and also the much 
misunderstood co-insurance clause. 

Co-insurance merely means that if the assured does not 
carry insurance for the percentage of value named in the 
co-insurance clause, in case of loss which involves less than 
the total insurance carried, the insurance company is liable 
only for the ratio of the amount taken out to the amount 
which should have been taken out. The 80 per cent co- 
insurance clause is the most common. Under this clause if 
the sound value of the property is $10,000 and the amount 
of insurance carried is $8,000, any loss up to $8,000 would be 
collected in full. Supposing, however, that this same property 
were insured for only $6,000, and there was a $2,000 loss. The 
ratio of the insurance carried, $6,000, to the sound value, 
$8,000, is three-quarters, and under the co-insurance clause 
the assured would collect only $1,500. 

Every store should make a point of being sure that insur¬ 
ance carried is equal to the value required in the co-insurance 
clause. When the loss exceeds the percentage of insurance 
named in the co-insurance clause the actual insurance in force 
will be paid in full. 

Fire Insurance.—Danger of fire in a dry goods store is 
the greatest hazard likely to be encountered. Preventive meas¬ 
ures should always be taken in proportion to the risk. Large 
stores should be sprinklered. Smaller stores should have port¬ 
able fire extinguishers in convenient places throughout the 
building. 

All contents of the store, including stock, fixtures, and im¬ 
provements, may be insured under a blanket policy. In the 
majority of cases this is the best policy, since the co-insurance 


184 


THE MERCHANTS’ MANUAL 


clause in this way applies to the aggregate value rather than 
the value of each class separately insured. In other words, 
while the sound value of the stock may often be worth more 
than 80 per cent if insured separately, when it is combined 
with fixtures in a blanket policy, fluctuations in value of stock 
do not count so much. 

It is frequently dangerous to insure fixtures and improve¬ 
ments separately because of the difficulty in many cases of 
deciding which are fixtures and which improvements. 

Stock includes everything which the store deals in as a busi¬ 
ness. The policy should never attempt to describe stock spe¬ 
cifically. It is enough to say “on stock, including containers 
and all articles used in the sale and shipment of same.” 

The same is true of furniture and fixtures. It is never wise 
to limit them too closely in the policy because in that event 
the implication is that anything not named is not meant to be 
included. Thus, in insuring furniture and fixtures it is enough 
to say “on store furniture, furnishings, fixtures, tools, imple¬ 
ments, utensils, apparatus, pictures, and awnings, all useful, 
ornamental, or incidental to the assured’s business.” In this 
way everything is covered generally. 

When a store insures goods in storage, it is well to remem¬ 
ber that all goods in storage are classified as stock. 

The important thing to bear in mind in insuring a building 
against fire is that the insurance should be in the name of 
the owner, or if in any other name, the other party must have 
an insurable interest and sustain a direct and actual loss 
through the burning of the building. 

Rates on stores differ with the risk. A building which is 
sprinklered may be rated 40 per cent less than one without 
sprinkler protection. Some of the items which make up the 
insurance rate are beyond the merchant’s control, such as 
general conditions, apparatus, exposure, etc., but the merchant 
can in many ways reduce the insurance rate. Fire doors and 
shutters are especially important in a mercantile establish¬ 
ment. Rubbish papers, and boxes, if allowed to accumulate, 
constitute a direct fire menace. All these preventable factors 
are counted in by the underwriter in making up the rate. 


INSURANCE 185 

Every merchant must make sure of two things in taking out 
fire insurance policies: 

1. See that all conditions of the policy are complied with 
or removed by counter-clauses. 

2. Be sure that coverage is ample. An unprotected loss may 
mean bankruptcy. 

It is possible to insure potential profits against losses due 
to fire by carrying a separate policy, based upon a fixed per¬ 
centage of the cost of merchandise on hand. Merchandise on 
hand is estimated at a figure high enough to meet average 
conditions. 

Liability Insurance.—Every merchant has a legal liability 
for injuries occurring to persons while in or on his premises, 
and due to his negligence. Members of the assured’s family 
and employees are generally excepted from this liability. For 
the small store opportunities for accidents to customers are 
comparatively small. In the large store, however, with its 
elevators, its drug departments, its escalators, etc., the oppor¬ 
tunity for accident is much enhanced. For both large and 
small store, liability insurance is necessary, the limits differing 
with the risk. 

Ordinary liability limits are $5,000 and $10,000, that is, 
$5,000 for accident to any one individual, and $10,000 where 
a group of individuals are concerned, no one of whom, how¬ 
ever, will be paid more than $5,000. For example, suppose 
three people were injured and the court awarded damages of 
$6,000, $3,000 and $1,000. The insurance company would be 
responsible for only $9,000, while the merchant would have to 
pay $1,000, since damages were awarded to one party in 
excess of $5,000, the one-person limit. Limits can be set at 
almost any figure, the rates being adjusted accordingly. 

Each policy stipulates to indemnify against loss, to defend 
suits arising out of the accident, and to pay costs and judgment 
up to the liability limit. 

Most department stores, and many specialty stores, will find 
it necessary to take out special liability policies to cover cer¬ 
tain special risks, notably: 

1. Elevators. 

2. Automobiles and teams. 


186 


THE MERCHANTS ’ MANUAL 


3. Workmen's compensation. 

4. Druggists' liability. 

1. The elevator risk may be covered by endorsement to the 
general liability policy, but the others require special policies. 
All liability policies should be taken out in the same company 
to avoid disputes as to responsibility in cases of double 
liability. 

The advantage of having a special policy covering elevator 
liability is that liability limits are usually higher since the 
risk of serious accident is greater. It also facilitates adjust¬ 
ment of premiums where there is more than one building and 
more than one class of elevator. 

2. Accidents are frequent with delivery trucks and liability 
insurance a necessity. This type of insurance is written for 
the term of one year only. The delivery fleet is generally 
insured under a blanket policy which permits substitutions 
and deductions for cars out of service. Experience rating 
plays an important part in determining schedules, that is, the 
accident record of the merchant’s fleet. General automobile 
liability insurance covers personal injuries to others, but not 
to the driver, who must be protected by endorsement or by 
Workmen's Compensation. 

Property damage insurance is usually covered by endorse¬ 
ment to the general liability policy and covers damage to 
property of others. 

Collision insurance covers damage to the assured’s car and 
is also usually written as an endorsement to the liability 
policy. The use of the $50 or $100 deductible form allows 
very moderate rates. If the deductible form is used, the 
insurance company is liable only for the damage above $50 
or $100, as the case may be. 

3. Workmen’s Compensation. While in many states Work¬ 
men’s Compensation insurance has been compulsory only for 
hazardous employments, the tendency of legislation and prac¬ 
tice is towards making all employments subject to such pro¬ 
tection. Such is the case in New York State at the present 
time. Statutes differ in almost every state and a merchant 
desiring special information should obtain a copy of the 
statute of the state in which he does business. 


INSURANCE 


187 


4. Druggists’ Liability. If a department store includes a 
drug department, druggists’ liability insurance is essential for 
protection against legal liability for injuries or death suffered 
accidentally through use of medicines dispensed to the public 
in an erroneous fashion, through prescription or delivery. 

Transit Insurance.—Insurance on goods received and 
shipped must be carefully considered. The most modern tran¬ 
sit insurance policy is that drawn up by the combined efforts 
of the National Retail Dry Goods Association and the John 
C. Paige Company, of Boston. 

The premium is based upon one-fourth of the gross business 
done at the rate of $.07 per $100 on that amount. The rate 
and the method of assessment are both decided departures 
from the usual routine. 

No valuations have to be declared on shipments received, 
that is, the policy accepts the ordinary bill of lading. This 
means a substantial saving to the retail store, because, reckon¬ 
ing conservatively, 40 to 50 per cent of merchandise comes via 
express on which in the past it was necessary to pay 10 cents 
on a valuation of $100. In some cases it has been 10 cents 
upon $100 over a $200 limit. 

The policy protects fully against pilferage, whether or not 
collection can be made from the carrier. A majority of the 
claims placed against transportation companies are for pilfer¬ 
age, ai)d such claims are the hardest to collect. 

Merchandise delivered to customers, either by the stores’ or 
public conveyances, is covered, a form of coverage which is 
new. It also includes specifically an act of God, fire regardless 
of origin, earthquake, etc. 

Coastwise transportation, not only in the Atlantic but in 
the Pacific, on the Great Lakes and the Gulfs, is included. 

Payment is to be made within thirty days from the date 
claims are presented. Every claim reduces the amount of 
insurance by the sum thus paid, and an additional payment 
must be made for reinstatement of the insurance in full. 

Miscellaneous Insurance.—Every store, according to its 
particular problems, will have certain special insurance re¬ 
quirements. 

For example, especially valuable goods may require protec- 


188 


THE MERCHANTS’ MANUAL 


tion by burglary insurance. Unless mentioned specifically, 
burglary policies cover solely open stock. They do not cover 
thieving, however. Cash and securities from the safe or vault 
may be included by special endorsement. Hold-up on the 
premises during business hours may also be included. 

All store employees who are entrusted with the handling of 
funds should be bonded by some reputable bonding company. 

If the business is a partnership, co-partnership life insurance 
is an excellent safeguard, particularly where one member of 
the firm is particularly valuable to the business. 

Rain insurance has been used to some extent where special 
sales are planned for a certain day and have been widely 
advertised. Although the profits might be made by holding 
the same sale the following week, the expenses of preparing 
for the first sale would be lost. 


CHAPTER XVI 


THE SALESCHECK SYSTEM 

The salescheck is the basis of all sales records. It not only 
gives disposition of merchandise and the money involved in 
the transaction but allows the sale to be credited to the par¬ 
ticular department and salesperson. From the salescheck 
all sales records and audits are made. It also carries the 
merchandise through the packing and delivery departments 
and serves as a basis for returns and adjustments. 

Saleschecks are usually made out in triplicate, although 
the duplicate form is quite common. The practice varies with 
the different stores, there being no uniform system. Some 
stores, for example, use three different kinds of saleschecks, 
for cash, charge, and C.O.D. The more usual method is to 
use two books, one for cash or charge, and the second for 
C.O.D. Some systems allow all types of sales to be made out 
on one slip. 

Salescheck Make-up.—The salescheck for use in dry goods 
or department stores is ordinarily composed of six parts. The 
triplicate form of salescheck allows a more complete record 
for the auditing department. 

On the original check there appear: 

1. The shipping ticket. If the merchandise is to be deliv¬ 
ered this is filled out and pasted on the bundle. Otherwise it 
is not used. More frequent practice is to use the triplicate for 
the shipping ticket. Few stores would permit their original 
check to leave as a delivery record. There is no standard 
practice, however. 

2. The sales ticket. This section goes to the auditor’s office. 

3. The salesclerk’s voucher. After being used by the sales¬ 
clerk for balancing accounts, this also is turned over to the 
auditing department. 

On the duplicate and triplicate are: 

4. Duplicate and triplicate of shipping ticket, one for refer- 

189 


190 


THE MERCHANTS' MANUAL 


ence to the shipping department and the other to the auditing 
department. 

5. Duplicate and triplicate of sales ticket, one for the cus¬ 
tomer and the other for the auditing department. 

6. Salesclerk’s voucher. After being stamped by the cashier 
it is returned to salesclerk, who keeps it a specified length of 
time. 





21750-50 


21750- 5Q 





Fig. 33.—Form of salescheck using original and duplicate. 


Many stores do not have their salespeople receive a 
voucher. If there is a tissue copy held in the tissue book or 
some other duplicate record, the voucher serves no real pur¬ 
pose. 

Figure 33 shows the simpler form of salescheck system, 
where original and duplicate only are required. The six parts 
remain the same. 




























































THE SALESCHECK SYSTEM 


191 


There are four ordinary variations in making out the sales- 
check, depending on the type of sale (five if C.O.D. is in¬ 
cluded). These are cash-take, cash-send, charge-take, and 
charge-send. The question of authorization of charges is 
treated in the chapters on Credits and Collections. 

Figure 34 shows a typical C.O.D. salescheck, used by R. H. 
Macy and Company. The entire original check goes with the 
merchandise to the delivery department. There is no audit 
voucher or customer’s memorandum. 


•I I jl'Z" C.O.D. 

3- . 

n 927 " 2 

M SU, 07 f/ OAAjLuJ 

14-E 71- 5± 

] /.?r 


/ 

ORIGINAL 








3^7“ 2a Depositor': 






7 jQ 










/r?-7 




ll 


s Account Avoids C. O. Ds. 


^A\ C.O.D $14ftNp 74 CTS 

327™ 3a Depositor's Aocount Avoids C. O, Os. 


wt 


Fig. 34.—Typical C.O.D. salescheck. 


Discounts.—One of the difficult problems in financial policy 
is the granting of discounts. While such discounts are likely 
to be taken advantage of it is almost impossible to refuse 
them where competing stores allow them. 

The following table, used by a large eastern store, is typical 
of discounts usually allowed: 


1. Fellow-workers and members of immediate family.10 per cent 

2. Clergymen and charitable organizations.10 per cent 

3. Hotels—for hotel furnishings only.10 per cent 

4. Dressmakers—on goods required for making.10 per cent 

—on ready to wear. 5 per cent 

5. Milliners .10 per cent 

6. Dry goods dealers (peddlers excepted).10 per cent 


Some stores limit trade discounts to cash sales while charg¬ 
ing full rates for credit. 




































































192 


THE MERCHANTS' MANUAL 


Many stores do not allow discounts to clergymen, nor is 
any discount allowed dressmakers on the purchase of the 
finished article, but only on material bought to make into 
their finished products. 

Some stores give a quantity discount of 5 per cent for 
ribbons sold by the bolt, handkerchiefs by the dozen, laces 
by the bolt, etc. 




MERCHANDISE CREDIT 


Mrs. VTllHara Frost 


64 Irrlng Place, N. Y. C. 


Reason Returned _ 
< 

Returned by _‘ 


Wrong Color 


12957 48 „ 


OATS 

9/1/21 


. Plainly Wrtttan and r.o Ahbr«- 


FCC'O IN STOCK 8V 

Burton 


fUOOKMAK S SIGhATUHfc 

SyvuafA 







1 

Sash 


18 

00 












Refund 










3 


fc» AMCAif AN SALS* AOO* CO . CTO . tCMiAA. M 

CREDIT VOUCHER 

2957 4ft 

Dept — S. P. Wo 


Goods Retd 

in Stock h„ Burton 


Dot e 9/1/21 


.Floor man s 

Sig 




Lord & Taylor 

NEW Y ORK. 


AUDITOR’S COUPON 


Fig. 35. —Special credit slip for returned merchandise. 


Returns.—When a customer returns merchandise a special 
credit slip is necessary. Figure 35 shows the form in use by 
Lord and Taylor, used for either cash or credit. As this is 
merely for the store’s record it consists of two parts only. 

The Auditing Department.—The auditing department is 
responsible for the checking up of all cash, charge, and C.O.D. 



































THE SALESCHECK SYSTEM 


193 


saleschecks, deposit, credit, and refund checks, and for the 
tracing and duplication of missing checks. 

From the totals of these checks, properly classified, are 
established controlling totals with which the various depart¬ 
ments must balance. The auditing department then tabulates 
from the charge, cash, and C.O.D. saleschecks, the daily sales 
per department and per salesperson, which figures must bal¬ 
ance with total charges, cash and C.O.D. sales for the day, 
from which are deducted the credits and refunds. 

Many stores use one form for cash and C.O.D. refunds, and 
another when returned merchandise is to be credited on cus¬ 
tomers’ bills. 

When the day’s business is over, buyers send to the auditing 
department a report of their sales taken from the sales clerks’ 
indexes, from which, on the following morning, is made up 
a departmental report of gross sales. This report is not 
official, but is formulated to give the executives of the store a 
quick report of the day’s sales, pending the audited figures 
which are received later. 

At the close of the day the salesclerks send their cash 
vouchers, daily want slips, charge and paid sales indexes, 
C.O.D. sales indexes and credit indexes to the auditing depart¬ 
ment in envelopes. These envelopes are opened in the morn¬ 
ing, the vouchers are filed for reference, the want slips sent to 
the merchandise office, the sales indexes given to the operators, 
and the credit indexes to the credit audit clerk. 

Charge Checks.—Figure 36 shows the route of charge-sent 
and charge-take saleschecks and the method in which they 
reach the auditing department. Charge-send checks are re¬ 
ceived from the delivery department and credit offices in 
boxes. Charge-take checks are collected in boxes by an audit¬ 
ing department messenger from the various cashiers’ desks 
and are received by the credit office. 

The sorters first straighten out all checks according to de¬ 
partments. The comptometer operators then check exten¬ 
sions, and compare the amount and serial number of the check 
with the corresponding amounts and numbers on the sales 
index. This comparison serves to make sure of three things: 
first, that no checks are missing; second, that no checks have 


13 


194 


THE MERCHANTS' MANUAL 


been missorted; and third, that amounts on checks have not 
been altered by the cashiers. If a voucher has been lost, it is 
customary to make a substitute voucher, see Fig. 37. 

ROUTE OF'CHARGE SENT”SALESCHECK 


Original 

A 


Office 

_ 

Tube Boom 

__ 

Check 


filed 

by 




Authorizer 

— 

Audit 

Stub 

— 







Charge 

Office 


Audit Stub 


\ 


C 

Duplicate 

D 


Address 

Label 

Customers 

Check 





- Tube Boom 

— 

Pasted on 

Parcel by P. I. 





’ut in Parcel 
by 

P, I. 


Triplicate 

E 


Inspectors 


Held with 


— 

Parcel 

Check 


by P.I. 



Spindled by 



her 



Charge Taken 


c 


Duplicate 

D 


Address 

Label 

Customers 

Check 


Held with 
Parcel by 
P. I. till 
Triplicate 
comes back 
Put in Parcel 


Triplicate 


E 


Inspectors 

Check 


Tube Boom 
Authorized 


Orginrl handled just as in Charge Sent 


Parcel Inspector 
to Belease 
Parcel 

Spindled by her 


Audit 


(Ada Collins Holme) 

Fig. 36.—Method of routing saleschecks. 


If saleschecks tally with the indexes, they are then figured 
on the comptometer and entered on operators’ sheets. Index 
cards and sheets are then balanced by placing the total from 
the sheet on the card and footing the card. The sheets are 


























THE SALESCHECK SYSTEM 


195 


then added and a total of all sheets and index cards made, 
which must balance. Totals are placed on the back of the 
last check and on operators’ sheets. 

Special operators should check the totals by adding all 
saleschecks. If not in balance, each department should be 
figured separately. If still out of balance, it is necessary to 
go over each sales book. 

After the chief operator has made a summary of the totals 
of all the operators’ charge figures for the day, the checks are 
given to the ledger audit clerks, who sort them according to 
ledgers and list and total checks on adding machines. The 
total of all the ledgers must balance with the chief operator’s 
total charges. When the figures are balanced, the checks are 


Dep’t 

Salesperson 

Manner of Sale 

Amount of Sale 

Serial No. 

Check No. 

THIS IS TO REPLACE LOST CHARGE STUB 

MADE BY BOOKKEEPER. 



Mo. 

Day 

Year 





Fig. 37. — Substitute voucher (actual size). 


stamped “audited,” dated, and sent to the bookkeeping depart¬ 
ment with the lists attached. 

Cash Records.—All records of cash taken in or refunded 
are received from the cashier. In addition, the cashier makes 
out a daily summary report showing total amount of cash 
turned in. The saleschecks are balanced with the cashier’s 
report. If out of balance, they are rechecked, listed, and 
shown to the cashier. They are then given to the sorters and 
arranged according to department and sales numbers, and 
given to the operators. 

Checks are first entered on balance sheets, and then com¬ 
pared with index cards to see whether totals agree. If every¬ 
thing is in order the operator foots the cash column on her 
sheets. The chief operator receives the total from each 
















196 


THE MERCHANTS’ MANUAL 


operator. If out of balance, the work is checked back, first by 
departments, and then by figuring each sales book separately. 

Cash Registers.—The various cash registers throughout 
the store should be audited according to regular schedule. At 
the close of the day a representative of the auditing depart¬ 
ment should tear off the tape containing the record of each 
amount registered, should note on the tape the total as shown 
by the indicator and reset the register for the next day’s 
business. 

In departments where registers which stamp regular sales- 
checks are used the checks received in the auditing division 
are balanced with the cashier’s report of receipts for each 
register. The register tape is then analyzed per salesperson 
and entered in the audit cash book. The cash turned in, the 
tape reading, and the amount of checks must agree. 

Where registers are used which do not stamp saleschecks, 
the register tape is analyzed and entered on the register read¬ 
ing sheet, which shows the amount sold by each salesperson. 
From this sheet is made a sales index for each salesclerk, 
showing the number of sales, amount, and department. After 
the cash sales for the day are balanced, the saleschecks are 
filed for reference. 

Records of cash, checks, money-orders, etc., received on 
account are sent to the auditing department where they are 
assorted alphabetically and listed on adding machines. When 
balanced with the cashier’s figures they are sent to the book¬ 
keeping department. 

The refunds made by each cashier are listed separately, and 
balanced with the refund list. The grand total is then 
balanced with the cashier’s figures and the refunds given to 
the credit clerk in the auditing department. 

Cash debits, which are received from the cashier’s office 
attached to list, are then listed in the auditing division and 
balanced with the cashier’s figures. 

C.O.D. Sales.—When C.O.D. saleschecks are received from 
the delivery department they are first examined to see that no 
register numbers are missing, then sorted into departments, 
and given to the operators. Checks are then extended, com- 


THE SALESCHECK SYSTEM 


197 


pared with index cards, and entered on operators’ sheets. 
Finally C.O.D. columns are footed. 

The chief operator receives totals from individual operators 
and verifies the amount by adding all C.O.D. checks. Checks 
are then re-sorted into register numbers and turned over to 
the C.O.D. bookkeeper. Checks that have been paid are 
withdrawn from the day’s work and attached to their respec¬ 
tive cashiers’ C.O.D. sheets. Total of all checks attached 
must balance with the total received from the cashier. 

C.O.D. merchandise credits are received from the returned 
goods department and sorted into register numbers. C.O.D. 
debit checks for which a merchandise credit is received are 
withdrawn from the file and the total of canceled C.O.D. 
checks must balance with the total of merchandise credit 
checks. All C.O.D. checks not accounted for are listed and 
sent to the delivery department to be traced. 

Missing Checks.—Missing check sheets are first compared 
with the index cards by one of the tracer clerks, who makes 
a list of the stubs required to locate the missing checks. The 
triplicate or tissue copy is referred to when tracing lost checks. 
A report of missing checks is made daily to the general office. 

The missing check clerk should check the “holding stubs” 
on file in the charge authorizor’s office, as this would account 
for many so-called “missing checks.” 

When the credit department holds a check pending investi¬ 
gation, it should notify the audit, which notice is given to the 
missing check clerk. 

When a check is lent by the auditing department, an order 
is required which is filed in place of the check and retained 
until the check is returned, when it is destroyed. 

Credits.—All credits for goods returned through the delivery 
department, which include call credits, split credits, and C.O.D. 
credits, are collected from the returned goods room by a clerk 
from the auditing department who receipts for the call and 
split credit by stamping the copy of the credit in the delivery 
department books with the date and the word “audited” and 
signs for the C.O.D. credits in a book where the register num¬ 
bers are entered. 

Credits for goods brought in personally by the customer, or 


198 


THE MERCHANTS' MANUAL 


merchandise credits, are received in the audit through the 
credit office, and from the departments in the envelopes, with 
the credit index cards, etc. 

Merchandise credits are first sorted by departments and 
checked off the index cards. All credits are then sorted by 
departments and listed by machine according to sales and 
department numbers. Refunds are added to the list. Figures 
are entered on the general sales sheet, from which they are 
posted in the general sales book, and in a book containing a 
record of the individual credits. 

When balanced, the credits and refunds are stamped with 
the date and the word “audited,” and the charge credits listed 
according to ledgers and sent to the bookkeeping department 
with lists attached. 

All missing call and split credits from the delivery depart¬ 
ment are traced by a clerk in the returned goods room from 
open entries on their books. All missing C.O.D. credits are 
traced by a clerk in the C.O.D. department of the audit. 

Merchandise or floor credits are audited according to their 
serial number and closed out as they come through. A missing 
list is made of the open entries, from which duplicate credits 
may be made out when required. 

Memorandum Charges.—In certain departments, such as 
rugs, furniture, and upholstery, goods are sent to customers on 
memorandum charge. Special sales books are used for this 
purpose. If the customer decides not to keep the goods or if 
a memorandum call is issued, care should be taken to see that 
a memorandum credit is made out on their return. If the 
customer wishes to keep the goods, the transaction is closed 
by making out a regular salescheck and issuing a memorandum 
credit to offset the memorandum charge. 

Some stores use a regular salescheck which is stamped “on 
three days’ approval.” If at the end of three days the mer¬ 
chandise is not returned, the check goes through as a regular. 

General Sales Records.—When the entire day’s sales have 
been balanced; the charge checks with the total of the ledgers; 
employees, mail order, and credit to cover charges; the cash 
checks with the cashier’s report; and the C.O.D. sales with 
the sheets from the C.O.D. office; the operators then cross- 


THE SALESCHECK SYSTEM 


199 


balance their sheets and turn them in to the chief operator who 
passes them to the clerk who keeps the general sales records. 

The operators’ figures are first entered on the daily report 
showing the charge, C.O.D., cash, and total gross sales per 
department. Credits are then entered on this sheet and 
deducted, thus giving the net sales for each department. 

From this report the figures are posted in a book showing 
the charge, C.O.D., and cash gross sales; also credits, and in 
another book the net sales, both books showing the daily, 
weekly, and monthly figures by departments. A weekly com¬ 
parative statement is made up from the net sales book and a 
weekly statement made for the paymaster of net department 
sales for the purpose of figuring selling costs. 

At the end of the month charge and credit changes are made 
up from figures received from the bookkeeping department 
and added to or deducted from the sales report of the last day 
of the month. 

The operators’ figures are also entered in the department 
and individual sales book, which shows the gross and net sales 
by departments and salesclerks. The cash, charge and C.O.D. 
saleschecks are counted per department and per salesperson, 
a record of each is kept, and at the end of the month an 
“average value” sales report is made showing the gross sales 
and number of checks used in each department, and the aver¬ 
age amount of each check. 

Stock Figures.—When an inventory is to be taken, the 
statistical office sends a notice to the audit advising them of 
the department and date of inventory. The complete sales 
and return record of this department is then closed up and the 
stock figures established and entered on the notice received 
from the statistical office, which is returned to them. 

Special Orders.—Special order books are made out in 
triplicate and used as follows: 

The original copy is sent to the floor superintendent’s file at 
the cashier’s desk, where it is filed according to due date. The 
duplicate copy is sent to the buyer’s office, from which he 
makes out his order to purchase the goods required, then files 
the slip alphabetically. The tissue copy remains in the book. 

When the goods are ready for delivery, the salesclerk sends 


200 


THE MERCHANTS’ MANUAL 


the duplicate copy to the cashier with the salescheck. The 
cashier removes the original from the file and sends both copies 
canceled to the auditor. The auditor then destroys the carbon 
copy and places the original in its proper numerical position in 
the file for special orders. 

L.O.G. Vouchers—L.O.G. (left out goods) vouchers are 
made on all orders where goods owned by the customers are 
left at the store. In each case the value of the goods (esti¬ 
mated if necessary) is noted on the voucher. A “promised 
date” must be assigned to L.O.G. vouchers whether requested 
by customers or not. 

The four copies of the L.O.G. book are disposed of as fol¬ 
lows: 

The original copy is sent to the floor superintendent file at 
the cashier’s desk and filed according to date promised for 
delivery. 

The yellow copy is retained in the department and placed 
in the alphabetically arranged file of unfilled orders. 

The card copy is attached to the goods with the exception of 
the voucher, which is given the customer as a receipt when 
the goods are brought in. 

The tissue remains in the book. 

When the goods are ready for delivery, the salesclerk sends 
the yellow copy and her salescheck, if any, to the cashier. In 
case of an L.O.G. voucher where no charge is made for work, 
and the customer takes the goods at the time, it is not neces¬ 
sary to make out a salescheck. Each day, when the L.O.G. 
vouchers are received from the various cashiers, the clerks in 
the auditing department destroy the duplicate copies and file 
the original according to its serial number. 

L.O.G. is very commonly known as “lady’s own goods.” 
Where a customer returns merchandise for re-alteration or 
similar cause these goods, while held in the store, are iden¬ 
tified by the L.O.G. 

Adjustment Vouchers.—An adjustment voucher is made 
out whenever an adjustment of a customer’s claim involves an 
expense not properly chargeable to the sales department where 
the goods were purchased. Floor superintendents fill out the 
vouchers personally, charging the expense to the department 


THE SALESCHECK SYSTEM 


201 


at fault and crediting the department from which the sales 
were made. 

In case of damage in delivery, the charge should be made 
against the delivery department, express company, or parcel 
post, as the case may require. The original copies of the 
adjustment vouchers are sent to the auditing department, 
where they are audited and a departmental statement made 
out. 

Adjustments which involve the express company should 
properly be made by the traffic department rather than by the 
floor manager. 


CHAPTER XVII 


CREDITS 

Attempts to do away with credit have been only partially 
successful. As long as customers are willing to pay for credit 
service, it will be extended to them. Whether or not credit 
customers are profitable to the retail store depends on the 
manner in which the department is run and the character 
of the personnel. It is generally held that the careful exten¬ 
sion of credit to a customer has a tendency to create a certain 
sense of loyalty to the particular store with which the credit 
account is enjoyed. Competition, however, has made credit 
easy to obtain, and it may be questioned how far this theory 
holds good. 

The Credit Department.—The credit department should 
be laid out with two ideas in mind. First, the efficiency of 
the layout should be considered, because the value of the 
credit service is dependent on the speed and the accuracy 
with which it is rendered. Second, credit applications and 
conferences between the customers and members of the credit 
department must be conducted with the greatest privacy. 
Hence, small offices, well lighted and ventilated, and arranged 
to give a proper psychological effect of mutual confidence, 
should be preferred. 

Placing the credit department on a scientific basis has 
naturally brought with it a recognition of the fact that if the 
customer is impressed with the dignity of the credit depart¬ 
ment’s function, there is less opportunity of friction. 

The Retail Credit Men’s National Association states that 
the first consideration in regard to the credit department 
should be its general accessibility, including adequate elevator 
service. According to this authority the ideal location, cir¬ 
cumstances permitting, is a central position on one of the 
upper selling floors or adjacent thereto. 

202 



CREDITS 


203 


The Credit Manager.—The credit manager should either 
be an officer of the firm, or should report directly to the chief 
financial executive. The function which the credit manager 
fulfils as a representative of the store to credit customers has 
a marked effect in advancing or retarding the growth of the 
store. 

The credit manager has a great deal of responsibility. He 
manages the opening of accounts and their collection; he 
authorizes charges and C.O.D. sales. He plans and installs 
methods of identification. In some stores he has charge of 
the bookkeeping and auditing departments. The larger the 
store and the more credit accounts exist, the more assistance 
the credit man will require in carrying out his duties success¬ 
fully. He remains the ultimate arbiter, however, and should 
always have control of closing and re-opening accounts, etc. 

It can readily be seen that the type of duties performed by 
the credit manager requires a type of man described by 
Franklin Blackstone of the Joseph Horne Company, Pitts¬ 
burgh. He says the credit man must have the following 
qualities: 

character, sagacity, perspicacity, confidence, optimism, faith, integrity, 
tact, suavity, diplomacy, alertness, courage, psychology, physiology, 
personality, intelligence, perception and finesse. In addition to these 
qualities he must be an instructor, to instruct the public in the 
meaning of credit, and an executive to see that the organization 
under him possesses those necessary qualities, and directs the grant¬ 
ing of credit in accord with the spirit of the profession and the 
institution. 

In addition to all these points the good credit man is known 
by the exceptions he makes to the rules rather than by his 
strict enforcement of them. A fundamental quality of the 
credit man is his knowledge of people. 

Divisional Credit Managers.—In the large stores it be¬ 
comes a physical impossibility for the credit manager to carry 
out personally the opening of all accounts and the handling 
of them. Consequently the work is divided among so-called 
divisional credit managers. In the J. L. Hudson Company, 
of Detroit, for example, five divisional credit managers handle 
approximately 27,000 active accounts. While they have the 


204 


THE MERCHANTS’ MANUAL 


Form 46 


Application for Credit Account 

Acct. No. .(o Co Date i- 



^3- 


Mr. 




Residence 


^'V-Vo-^^A 


■ Si- 


Tel. No.f^UrVi . li> Lfl 3 


Kind of Business or Employ S oJo 


Business Address q CD JLt-Aj^L. ^ i 



Bank. 


References 


Reference _ \\TolI{LcOvic*--Q 

lo-Cir (\p 








4l 


~t1I 0 W\ CT^o^Jl * 


Real Estate at 


Val. 


Enc. 


Mer. Rat. 


Sil 


G 




Authorized Buyers 


3* 


& 


Bills 



Class 

Rep’g 

Date 

Opened 

U. c. 

Av. > 

Pays 

DatO 

Reported 

Remarks 













Fig. 38.—Credit application form. 










































CREDITS 


205 


authority to open and pass on accounts, when in doubt they 
consult with the credit manager. 

Applications.—It has come to be a general principle in 
the granting of credits that information must be secured in 
advance rather than afterwards. Furthermore, a personal 
interview is desirable, if it is possible to arrange. By tactful 
questioning the credit man finds out the basis of the cus¬ 
tomer’s credit. This may be financial or moral. Financial 


For And In Consideration of the sum of One Dollar and other valuable 
considerations to me in hand paid by FRANKLIN SIMON & CO. Inc., 
of 416 Fifth Avenue, New York City, the receipt whereof is hereby acknowl¬ 
edged, I hereby guarantee the payment of any and all bills of and for 
merchandise that may be sold by said Company, its successors and assigns 

on and after the date hereof, to. 

of., provided, however, that my 

Lability shall in no event exceed.per month. 

This guarantee shall continue in force from month to month until 
such time as I shall give the said Company written notice of the dis¬ 
continuance thereof and all bills for merchandise sold prior to the receipt 
of such notice have been paid. Notice of default and of separate transac¬ 
tions is hereby waived. 


New York,.191.... 

WITNESS: .(L. S.) 

Address. 


Fig. 39.—Guarantee Form. 

responsibility is governed by income or salary, ownership of 
real estate, etc. Moral responsibility is determined by busi¬ 
ness or social connections. To confirm information secured, 
references are obtained, either trade, personal, or both. 

Figure 38 shows the form of application blank in use by 
Stix, Baer and Fuller Dry Goods Company, of St. Louis, 
Missouri. This blank is for the customer to fill out. It 
contains name and address, husband’s business address, and 
position or firm with which he is connected. Particulars as 
to salary are also required. The customer in this case is 










206 


THE MERCHANTS ’ MANUAL 


permitted to name her own limit and if the store’s investiga¬ 
tion proves satisfactory this limit is allowed. In many cases 
the idea which the credit applicant has of a purchase limit 
affords considerable insight into the character of the risk. 
For example, a man with $1,000 a year income who plans 
to have a limit of $100 a month has such economic views that 
his application is likely to be very carefully scrutinized. 

Knowledge of the city is highly desirable, if not essential. 
The place of residence is usually prima facie evidence of the 
applicant’s general welfare, although in no way conclusive. 

Many credit departments make it a rule to ascertain former 
address of the applicant, particularly in case he or she has 
recently come to the city. Almost every application blank 
requires the signature of the applicant. 

The credit man should always impress the customer with 
the fact that settlements are to be monthly, and that this 
agreement must be lived up to. In some cases a guarantee 
is required, such as illustrated in Fig. 39. 

References.—References will usually consist of banks, 
trade references, and personal references. As far as personal 
references are concerned, the requests should be typewritten, 
and a stamped return envelope enclosed. The following 
sample can be adapted to suit the special case: 

Joseph Horne Company 
Pittsburgh, Pa. 

Department of 
Accounts 

. 192 .. 


Dear Sirs: 

Mr. Richard Roe, 99000 Tenth Avenue, Pittsburgh, formerly 70000 
Doe Avenue, Chicago, has applied to us for a monthly charge account and 
has referred to you for identification purposes and as to financial respon¬ 
sibility. 

Thanking you in anticipation of a response, on this letter-head, we are 
Yours truly, 


Joseph Horne Company. 





CREDITS 


207 


The bank reference may be obtained on a printed form, 
which merely requires filling in by the bank. The following 
form has many excellent features: 


Department of 
Accounts 


Joseph Horne Company 
Pittsburgh, Pa. 


192... 


Gentlemen: 

As we have been referred to you, please give us such information as you 
may have regarding the responsibility and credit standing of: 

Name. 

Residence Address. 

Business Address.Occupation. 

Members of 

Yours truly, 

Joseph Horne Company. 

Amount of Credit Desired $.per month 

Reply: 

Account with us since. 

Loans.Yes.No. 

Collateral.or personal responsibility.or 

endorsement.. .. 

Is account satisfactory?.Is it small?.Moderate.Large. 

Estimated Net Worth.$. 

Remarks.. 

This information is confidential and given without liability on the part 
of the bank. 


By 


























208 


THE MERCHANTS' MANUAL 


The financial reference is valuable only as indicating the 
amount of money ordinarily carried at the bank, and the 
character of the applicant’s financial dealings with the bank 
in the way of loans. 

Perhaps the most valuable sidelights on the customer’s 
financial habits are the trade references. These give some 
indication of the manner in which the customer pays bills 
owing to other concerns. The form, as in the case of the bank 
reference, may be printed and arranged for the greatest con¬ 
venience of the concern requested to fill it in: 

Joseph Horne Company 
Pittsburgh, Pa. 


.192... 

Department of 
Accounts 


Gentlemen: 

As we have been referred to you, please give us such information as you 
may have regarding the responsibility and credit standing of: 

Name. 

Residence Address. 

Business Address.Occupation. 

Former Address... 


Yours truly, 

Joseph Horne Company. 
Reply. 


Sold since.19. 

Pay us in 

30 days. 


Highest credit. $ . 


Now owing.$. 

60 days... 


Is account satisfactory?. 

90 days. 


Remarks. 

4 Mo. or longer 



Account closed. 



Collected by Attorney 
or Agency. 




By 
































CREDITS 


209 


The Credit Bureau or Exchange.—Associations for the 
exchange of credit information are rapidly growing in scope 
and in importance. They range in size from the small group 
of closely affiliated stores to the city-wide credit bureau, and 
in some cases the state-wide credit-rating service. For suc¬ 
cessful operation of a retail credit bureau there is one funda¬ 
mental condition, namely, full cooperation and no credit 
secrets. 

The advantages are numerous: 

1. Losses will be reduced because of the wider dissemination 
of information concerning poor credit risks. 

2. Number of slow-pay customers will be reduced because 
of general tightening-up in collections. 

3. Customers still owing accounts who have been lost track 
of are frequently found. 

4. It serves to educate the public in the fundamentals of 
sound credit rating. In many cases this has been done by 
means of an advertising campaign conducted through the 
newspapers. 

5. The credit man in many cases can base his reply to an 
applicant for credit on the report of the credit bureau. It 
avoids looking up references and lessens the risk. 

6. Changes of address are promptly given to member stores, 
which allows files to be kept up-to-date. 

7. The credit men belonging to the bureau are allowed to 
see the benefits of cooperation as opposed to cut-throat com¬ 
petition. For many years, although it w r as generally admitted 
credit was necessary for business, merchants persisted in the 
narrow policy of hoarding all credit information and regard¬ 
ing with distrust any attempt on the part of other merchants 
to obtain credit information regarding their patrons from 
them. 

Specimen Credit Bureaus.—The work of many credit 
bureaus has been extended to cover the collection of accounts, 
and this phase of their activity is taken up in the following 
chapter. The function of the bureau in passing upon credit 
risks, however, deserves further consideration and. for this 
purpose some of the better known organizations are described. 

The Associated Retail Credit Bureau and Creditmen of 


14 


210 


THE MERCHANTS' MANUAL 


Omaha, a branch of the Associated Retailers of that city, 
employs sixteen workers, and has a total of 257,000 names 
listed on master cards, each of which contains an average of 



" Co-operation is the source of progress.” 

Holdm t mcmbcrthip in iHr ivo |>ui national yMocurioDs for ctmIj! in forma non. ibc Retail Credit Men'* NanooaJ AmoqiMd 
ted the National Aaooinoo of Mercantile Ageoocs ineurea to the membership • qualified 
representative to every city and couoty to Amina 



Doaglai 2So9 Doa^ltu 2 S54 

Associated Retail Credit Bureau & Creditmen 


204 Lefl&ng Building 


OMAHA. NEB_192.__ 

As a favor to this office and a convenience to the busi¬ 
ness interests of Omaha, we are asking you to fill out the 
statement as below. 

Accept our thanks for prompt answer. 

Yours truly, 

ASSOCIATED RETAIL CREDIT BUREAU 
A CREDITMEN. 


Associated Retail Credit Bureau A Creditmen, 

Omaha, Neb. 

Sirs: For the purpose of establishing or obtaining credit 
now or hereafter with merchants, members of the Associated Retail 
Credit Bureau A Creditmen, Omaha, Neb., I hereby make the follow¬ 
ing statement, which I* affirm to be trues 

Name in Full 

Address at Present 

Former Address 

How long have you lived in Omaha 
Occupation or profession 

By whom employed How long 

Previous position or employer 

Age Married Single Widow 

Own real estate at Value 

Monthly income or salary 

Bank with Checking Acot. 

Savings Aoot. 

Owe merchants at present time $ 

Have or did have accts. with following* 

Personal Inferencess 

Dated Signed 


Fig. 40.—Letter recording information from a new resident. 


five reports of the individual’s credit rating. Figure 40 shows 
the form of letter used for eliciting information from new¬ 
comers. Such procedure not only furnishes all member stores 
with credit information concerning this individual, but allows 










CREDITS 


211 


the individual to establish charge accounts at any stores 
provided he gives satisfactory account of himself. 

The master card, see Fig. 41, serves to determine the cus¬ 
tomer’s credit standing. Each store’s report is kept in a single 
column, the identity of the store being represented by a code 
number. Each letter in the left-hand column indicates the 
character of the account as follows: 


CREDIT CODE 
Associated Retailers of 
Omaha 

A Desirable 
Account 

B Undesirable 
Account 

C Account given to 
collection agency 

D Dead 
Beat 

E Pays in 30 to 
60 days 

F Pays in 60 to 
90 days 

G Does not pay 
in 90 days 

H Account 
closed 

I Account opened less 
than one year ago 

J Account opened from 
one to three years 

K Account opened more 
than three years 

L Makes unjust claims 
in settlement 

M is chronic returner of goods 
or approval crank 

N Seldom pays bills 
in full 

0 Balance keeps 
increasing 

The dates in the upper left-hand corner of the master card 
show when the last report was made. Crossing out the store 
code number shows that a new report has been made. Special 


212 


THE MERCHANTS’ MANUAL 


information, together with dates, is placed in the lower right- 
hand corner. Every member of the association reports new 
accounts, some daily, some twice a week, and some once a 
week. Changes in paying habits are also reported. If ac¬ 
counts are closed, exact reasons for such action are sent to 
the association. 


ZZ. 

STORES MAKING REPORT 

DMT, 













0*T« 













DATE 













OAT. 

& 



*/'t 









OAT. 

fk 

4i 

W'i 










DAT. 


>4i 

4r 










A 

W 












B 













C 













D 


> 


& Wj 









E 

& 


sq 

(tf 









F 













G 

?* 

i<. 











H 

& 


91 










I 













J 

a 


0 










K 



i 










L 

J 












M 













N 

,,s 












0 

£ 













J9< 


. 

Residence.. .*?. . 

Removed ( to. fitS .. /&*£.. 

Remove<T"t(5 .T.«5T//. cP- - 

Removed to.. 

Removed to. 

Business Address . 

Occupation. CfL&Ap... @t&rrxs£\/.~. 


■oJSr^CD. CD HD 

Special Information (Cf?-. ^/r^8.}'. 7y . ... 

(ol6>s. o./ a/.tiJ. ~ n “— 

./^sT. 


(^.y^&pA) 



(National Retail Clothier) 

Fig. 41.—Master card which determines credit standing. 


The Los Angeles Retail Merchants Credit Association. 

—The Retail Merchants Credit Association of Los Angeles 
can be termed a credit agency, since it not only prepares 
reports but makes collections, the latter, however, being sub¬ 
sidiary to the credit information service. 

Following is the general form of service contract used: 


SERVICE CONTRACT 




I. The undersigned, hereinafter termed the “Subscriber,” hereby 
employs the Retail Merchants Credit Association of Los Angeles, a 
Corporation, hereinafter termed the “Association,” subject to certain 
terms and conditions, to-wit: 

From year to year as its agent to investigate, obtain, compile and 
on request, to furnish to said Subscriber for its sole use and benefit, 
information concerning the character, reputation, general standing, 
financial responsibility and paying habits of persons transacting busi¬ 
ness as principals for their own account, and as part consideration 

























































CREDITS 


213 


therefor, agrees to pay to the Association concurrent with the execution 
of this instrument, and annually in advance thereafter the sum of 
Fifteen and no-100 ($15.00) Dollars. 

And further agrees: 

1. That the Association shall not be liable in any manner for loss 

or injury to the Subscriber resulting from its procuring, col¬ 
lecting and communicating such information. 

2. That the Association does not guarantee the accuracy of said 

information. 

3. That the Subscriber will neither ask for information for the use 

of other parties nor permit it to be done. 

4. That this service does not contemplate furnishing reports on 

firms, corporations or persons .not transacting business for 
their own account. 

5. That the Association reserves the right to reject or cancel this 

contract at any time allowing for the unearned portion of the 
stated pecuniary consideration. 

6. That all information supplied by the Association to the Sub¬ 

scriber shall be held in strict confidence and shall never be 
revealed to the persons reported, nor to any other persons. 

7. That the Association may upon written notice increase or 

diminish its existing charges. 

II. As an additional consideration therefor the Subscriber agrees 
to furnish to the Association: 

(a) The names and addresses of prospective customers opening 

new accounts. 

(b) All changes of residence, names and marriage status of cus¬ 

tomers known to the Subscriber. 

(c) Names and addresses of all persons whose accounts have been 

closed or refused, placed out of the Association for collection, 
charged to suspense or to profit and loss. 

(d) All bad checks, frauds, notices of non-responsibility and 

kindred information. 

(e) Within thirty days after this subscription a complete list of 

its credit customers, including names and addresses, as the 
same appears in its ledger, the highest amount of such 
customer’s purchases and the time of payment. And shall 
also furnish, upon request, the ledger history of any customer 
on the subscriber’s ledger. 

III. The Subscriber shall be entitled to: 

(a) Reporting and Collection service at regular rates (see schedule 

on back hereof). 

(b) Membership in the Retail Credit Men’s National Association 

with full privileges. 

(c) Daily service sheet. 


214 


THE MERCHANTS' MANUAL 


(d) Privilege of using the “Name Letter” (if a user of Collection 

Department). 

(e) All social and service features of the local and National Asso¬ 

ciations. 

Four systems of reports are used: 

1. Information contained in the file given over the telephone. 

2. Tabulated trade clippings. 

3. Report of personal, historical, financial, and paying 
information returned through investigation of the leads and 
references furnished by members. 

4. Special report in certain cases by man who interviews 
party personally if necessary, but in any event complete 
report is rendered. 

The association advises against the use of rating books as 
being out-of-date almost as soon as issued. It also believes 
that the indiscriminate offering of charge accounts will lower 
credit standards in the community. 

Figure 42 shows forms used in making reports to subscribers. 

The Small Town and Rural Credit Bureau.—While the 
difficulties to be overcome in establishing cooperative methods 
between city retailers have been great, the obstacles met with 
in small town and rural communities are ten times greater. 
The Weld County Credit Association, of Greeley, Colorado, has 
been successful in reducing credit losses. The problem was a 
difficult one owing to the volume of transient labor and the 
facility with which farmers could trade in several towns by 
use of automobile. The county credit system prevented start¬ 
ing new accounts in various towns by the same individual 
with dishonest intent. An individual with a bad record has 
no opportunity of starting accounts because a report on his 
case has preceded his request for credit. 

According to an official of the bureau, 

records are so complete that we can-show size of farm, exact location, 
how many sons assisting in farm operations, whether owned or 
rented, if rented who owner is, kinds of crops raised on farms, exact 
acreage as to beets, potatoes, and principal crops raised on farms, etc. 

Notification.—The next step after investigation of refer¬ 
ences should be notification of the customer that her appli¬ 
cation has been accepted or refused, as the case may be. 


CREDITS 


215 




*co 


2? 

e 


s 



m 

Ch 

d> 

rO 

• w-4 

« 

C/3 


^ O 


+-> 

(h 

o 

a 

o 

(H 

hC 

S 

c3 

s 

a 

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*a 

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m 

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£ 

u 

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CM 


6 

►H 

R 






















































































216 


THE MERCHANTS ’ MANUAL 


If the account is accepted it is necessary to state the limit 
which has been set by the store, and other terms, if such exist. 

It is also advisable to set forth at length the system of 
identification in use at the store, the reason for its necessity, 
etc. 

The usual letter terminates with an expression of thanks 
for the opportunity to be of service, and is signed by the 
divisional credit manager. 

It is quite essential that a direct application for an account 
should receive an equally direct reply either granting the 
application or declining it. 

In the first case, this is a very simple matter as the customer 
does not particularly care what form is employed so long as 
the answer is favorable. Some firms go to considerable expense 
in sending highly engraved notification forms, for two pur¬ 
poses. First, to let the customer know that her request has 
been granted, and second, to bring to her attention in a very 
definite way the terms of the store regarding payment of bills. 

If the customer did not make the request in person at the 
office, it is always advisable to mail her a signature card for 
record. This card can also be drawn in such a way as to have 
the customer assume obligation of all purchases made not only 
by herself but by her husband and any person of the family 
purchasing on the account. 

In the case of declining the account the problem is more 
difficult. The customer may have been a very satisfactory 
cash patron who, if she is undiplomatically handled, will with¬ 
draw her cash patronage as well. At this point, it might be 
well to remember the old adage of “Let sleeping dogs lie,” 
because, while hundreds of customers may bring the store a 
most desirable cash trade, it does not always mean that their 
charge business can be solicited; some of them pay cash by 
force of necessity. 

The Wm. Filene’s Sons Company, of Boston, Massachusetts, 
have a form which reads as follows: 

Will you not bring up again at some future date the question of 
opening an account with us? 

Just now the results of our investigation hardly justify our selling 
you on open account—please do not misunderstand us—we fully 


CREDITS 


217 


appreciate that your character and intentions are of the best; it is 
simply that your financial responsibility, so far as we can determine, 
does not quite measure up to our rather strict requirements. 

May we, therefore, express the hope that you will continue for the 
present to purchase for cash and at the same time tender our apprecia¬ 
tion for past patronage. 

Bullock’s of Los Angeles use the following form: 

Referring to your application for a charge account, we regret to 
advise that we are delayed in opening the account owing to the fact 
that we have not as yet been able to obtain the information which 
would permit us to do so. 

We have no doubt that you are in a position to submit further 
information bearing on the matter and should you care to do so, it 
will be our pleasure to give your application further careful considera¬ 
tion upon hearing from you. 

Assuring you of our desire to show you every consideration in the 
matter we are- 

One of the large New York houses writes the customer to 
the effect that owing to the fact that the information brought 
to their attention is not sufficient for them to extend the credit 
requested, they suggest that the application be withdrawn and 
that another application be made, say, six months or a year 
later. Their contention is that the customer has not been 
declined; he has had an opportunity to withdraw his applica¬ 
tion and nothing appears on their records against him. It 
might so develop that his financial circumstances might im¬ 
prove so much as to justify their granting his request. They 
claim to have salvaged a great many such accounts which 
otherwise would have been turned down and lost. 

Identification.—The principle seems to be generally con¬ 
ceded that identification and authorization should be separate. 

Means of identification can be divided into two general 
classifications with modifications ranging all the way between. 
The coin system, which many houses have adopted, provides 
for the issuance of a coin to each charge customer as a means 
of identification. The signature system requires the customer 
to sign all “take with” charges. In many cases the floorman’s 
signature is required in addition. Both these methods have 
advantages and disadvantages. 

The advocates of the coin system stress the danger of 


218 


THE MERCHANTS’ MANUAL 


delaying the sale, while advocates of the signature plan point 
to the increased protection against fraud. 

Halle Bros., of Cleveland, require customers to sign for all 
“charge-take” purchases. If there is anything suspicious 
about the signature it is sent to the credit department for 
comparison with the original. It has been found that cus¬ 
tomers accept the store’s ruling in regard to signatures without 
difficulty. Charles R, Egeler, the credit manager, states that 
frauds have decreased as a result of the signature system and 
attempted deceptions have been detected. 

A further point in favor of the signature is that, in case of 
apprehension of the defrauder, the charge of forgery can be 
added to that of larceny and is generally more easy to prove. 
Rudge and Guenzel, Lincoln, Nebraska, require signatures on 
all charge purchases whether “take-with” or “to be delivered.” 
It was felt the charge-take customer might feel she was under 
suspicion were her companion, who was having goods sent, 
not obliged to sign. 

The store using the coin system must always provide for 
cases where the customer does not bring the coin with her, the 
danger of counterfeiting, and presentation by illegitimate 
possessors of found or stolen coins. 

The report of the committee on credit department methods 
of the Retail Credit Men’s National Association makes certain 
definite recommendations regarding the use of coins. It says: 

Positive identification is essential on “take-with” charge sales. An 
identification coin, or similar numbered symbol, should be furnished 
the customer. When the customer is unable to present the coin or 
symbol the floor superintendent should be required to identify the 
customer and indicate on the back of the sales check the manner in 
which identification was determined; also to sign for delivery, on front 
of sales check. In addition thereto, the customer should be required 
to sign the sales check when the coin or symbol is not shown. 

The same form of identification should apply when goods are de¬ 
livered to an address other than that to which the charge is made; 
or when “take-with” charges are purchased by one person in the name 
of another. 

When an identification coin is mailed to a customer, a return post¬ 
card, acknowledging receipt of the coin, should be enclosed for signa¬ 
ture. 


CREDITS 


219 


Systems o£ Checking Coins.—The report goes on to de¬ 
scribe methods of checking coins. When merchandise is 
delivered merely on presentation of the unchecked coin, it is 
recommended that books containing the coin numbers should 
have an additional space wherein to enter the name of the 
person to whom the coin is charged. The space in front of 
the number should be used to check the coin if lost, or the 
account closed or suspended. It should not be reinstated but 
a new number issued in each case. 

Another method of checking coins is by the use of a card 
system. Cabinets containing these cards are placed in various 
parts of the store. Only such numbers as it is desirable to 
control are placed in the cabinets. Numbers of lost coins, 
for example, are immediately filed. If a coin is found, the 
card is withdrawn and destroyed. When an account is sus¬ 
pended the number of the coin is placed on a card and inserted 
in the cabinets, and removed when the account is reopened. 

Authorization.—The question of how charges shall be 
authorized has agitated the retail credit world for a number 
of years. Although messengers are employed in a small 
number of specialty shops, the main systems of authorization 
are either by conveyor tube, or telephone. Many systems 
combine the two, using the telephone for “charge-takes” and 
the tube system for “charge-sends.” 

Four distinct methods can be outlined: 

1. Central tube room authorizing all charges. 

2. Charge-takes authorized by telephone; charge-sends au¬ 
thorized in delivery room. 

3. Charge-takes authorized by telephone; charge-sends by 
tube system. 

4. All charges authorized by telephone. 

Central Tube System.—The most modern form of tube 
authorization is known as the automatic belt type. Charge 
carriers are automatically divided from cash carriers by 
mechanical separators. The former go on a fast-running belt 
conveyor to the alphabetical sorter in the authorizing section 
of the tube room. 

The tube room layout provides for alphabetical sub¬ 
divisions of the index. Carriers, having first been opened by 


220 


THE MERCHANTS’ MANUAL 


a sorter, are brought to the authorizes by gravity chutes. 
Beneath the top of the authorizing table runs a tube line 
leading to the dispatcher, who returns completed transactions 
to the out stations. 

A “refer” line runs from each authorizer to the credit office 
in case it is necessary to get further authorization. 

Another central station layout provides for a multiple index 
system for each authorizer. The only necessity here is to see 
that the carriers are evenly distributed among the authorizers. 
The sorter is done away with. 

A third system provides for receiving all “take-with” charge 
carriers on the inside and “send” carriers on the outside of 
the tube arrangement. In the aisle between the tubes and on 
both sides, outside, are placed rotary indexes on the unit plan 
arranged so that authorizers can step to any portion of the 
alphabet very quickly. Names on indexes should be only 
those in good standing. To insure speed and avoid chances 
of mistakes it is customary to use green carriers for “take- 
with” credit sales, white for cash and red for those to be sent. 

The Telephone-Delivery Room System.—Where a tele¬ 
phone system is used for the authorization of “charge-take” 
transactions, methods differ. Salesclerks are sometimes al¬ 
lowed to deliver up to certain limits without waiting for 
authorization, while floormen are allowed to pass upon larger 
amounts. Above a certain limit all charges are referred to 
the credit authorizers, however. 

If clerk-wrap is used, the sales check is inserted in the 
stamping device of the charge telephone. If the authorizer 
finds the account 0. K., the pressing of a button controlled 
on the switchboard in the credit office stamps the sales check. 
If the inspection system is used, the inspector performs the 
operation of having the check canceled. 

While it is true that a great many of the electric phone 
systems require their operator to make what practically 
amounts to a duplicate check for their sales slips, this dupli¬ 
cation of effort slows down the service that the store is sup¬ 
posed to give its customer and later duplicates the number 
of paper transactions and does not produce any real good in 
the bookkeeping department. 


CREDITS 


221 


In the Bailey Company of Cleveland the slips are not made 
out, but the operator refers directly to the ledger on all refer 
transactions, immediately giving the answer back to the clerk. 

According to the report of the Retail Credit Men’s National 
Association, on the majority of accounts it is advisable to 
refer direct to the ledger to get an accurate record. The 
credit switchboards are arranged in units corresponding and 
associated with the alphabetical subdivisions of ledgers and 
billing machines. In this way the different units of the 
switchboard are lined up in a row parallel with the book¬ 
keeping machines. Directly back of the switchboards, with 
an aisle between, are the ledger racks, so arranged that the 
authorizer standing behind the switchboard has immediate 
access to the ledgers from one side of the racks, while the 
billing-machine operators have access to the ledgers from the 
other side of the racks. In this way the authorizer is always 
near both the operator and the ledger racks. 

Each switchboard operator has a pad of small forms printed 
with a space in the middle for the customer’s name and 
address. Along the marginal edges are amounts from one 
cent up, the dates, authorizer’s number, etc. The operator 
writes down name and address and checks amount and date, 
at the same time calling the charge to the authorizer. If it 
is 0. K. the operator stamps the check. The operator’s form 
is placed in the ledger as a temporary posting. 

All telephone authorization can be centralized in the credit 
office, since 200 lines can be concentrated in a space 4 feet by 
8 feet. 

Authorization in the delivery room of “charge-send” sales 
is done from the packages. Packages are sorted alphabeti¬ 
cally or by street names and chuted to the authorizers. In 
such a system as this indexes should be of such a kind as to 
allow the recording of the maximum number of names in the 
minimum amount of space. The delivery system of authori¬ 
zation frequently causes errors and necessitates a certain 
amount of night work. 

Telephone and Tube Combination.—Combination sys¬ 
tems, which are used in a large number of stores, aim to secure 
the maximum speed in credit authorizations. “Charge-take” 


222 THE MERCHANTS’ MANUAL 

transactions are authorized by telephone as previously de¬ 
scribed. 

“Charge-send” saleschecks are sent through tubes to the 
tube room, where they are sorted and referred to authorizers 
assigned to specified divisions of the index. 

Automatic Telephone.—Credit desks are arranged in the 
authorization department according to the division of the 
alphabet, with telephone connecting each department or 
station where credit is to be passed. The inspector or sales¬ 
clerk selects the division of the alphabet desired and is auto¬ 
matically connected with the correct authorizer. 

The authorizer records on a pad the name and address of 
the customer, the department, and the amount of sale. If she 
finds the charge 0. K., she calls back an identifying number 
corresponding with the entry number on her pad. This identi¬ 
fication number is placed on the lower left-hand corner of 
the sales check and forms the authorization for delivery of 
the package. 

The automatic stamp is not used in this system. If a 
salescheck comes to the office without the identification num¬ 
ber, it is immediately investigated. The pad of entries kept 
by the authorizer serves as a check on customers’ purchases 
for the day. 

Irregularities in Charges.—It frequently happens that 
sales slips contain certain errors which must be corrected 
before the charge can be authorized. Addresses may be 
different, initials of the name may be wrong, etc., in addition 
to incomplete filling out of salescheck by salesperson. Figure 
43 shows a convenient form for use by authorizers when it 
is desired to make corrections in saleschecks, or when it is 
necessary to communicate with the salesperson in regard to 
the sale. 

Authorizers’ Authority.—The function of the general 
authorizers in the tube room, delivery department, or wher¬ 
ever they are located, is usually clearly defined. If the charge 
exceeds the limit, or a certain percentage of the limit, the 
official known as the “refer” authorizer, located in the credit 
room, must be communicated with. In many cases the “refer” 
authorizer is an assistant to the credit manager. 


CREDITS 


223 


JOSEPH HORNE COMPANY 


Returned For Reason Checked in Margin. Comply with 
and Send Back at Once Through Tube 

1 Address not as indexed: See Dept, of A/c 

2 Are goods on approval? 

3 Amount of money received incorrect 

4 Charge incorrectly 

5 Coin number required or goods sent home 

6 Coin number should be entered on saleslip 

7 Counterfeit (mutilated) money 

8 Comply with and deliver goods at once 

9 Errors in figures or figuring 

10 Give former address 

11 Give purchaser’s address 

12 Give register number 

13 Have O K’d by Adjuster 

14 Have O K’d by. 

15 Have saleslips examined by inspector 

16 Have marked void and make out new saleslip 

17 Have made out with indelible pencil or ink 

18 Have clerk see. 

19 Have O K’d by the Supt or Paymaster 

20 Have Bank Check (Refund Checks) endorsed 

21 Have check properly countersigned 

22 Holding at Department of Accounts 

23 Identify the purchaser 

24 Indicate Name of City on Bank Check 

25 Indicate whether net or regular 

26 Initials incorrect 

27 Indicates purchaser’s name (initials) 

28 Junior or Senior 

29 Keep saleslip but return purse 

30 Local reference (identification) required 

31 Make figures, initials, name and address legible 

32 Make saleslip out correctly 

33 Name, address required on bank check transactions 

34 Name and address on all saleslips 

35 Name incorrect 

36 No record of an account in this name 

37 No money received 

38 No original (duplicate) received 

39 Refer to Floorman 

40 Request clerk to call at Dept, of Accounts 

41 Request purchaser to call at Dept, of Accts. 

42 Send all purses down to be examined 

43 Special identification required 

44 State transaction 

45 State other initials 

43 State amount of money received 

47 Telephone order No. required 

48 Use proper purses 

49 Was discount allowed at time of purchase? 

50 Written order required or book; See Dept of A/c 

51 . 

52 . 

53 . 

Clerk No.Dept.Date. 



Fig. 43.—Form used when making corrections in salescheck. 















224 


THE MERCHANTS’ MANUAL 


If initials or addresses differ, some stores require direct 
reference of the charge to the “refer” authorizer. In any 
case charges on restricted accounts are transmitted to the 
“refer.” In large stores several “refer” authorizers may be 
necessary. The ledger, balance cards, or whatever system is 
used to show the customer’s account, should in all cases be 
near at hand. 

In order that the indexes from which the authorized mark 
may be kept up-to-date in regard to restricted accounts, a 
standard practice rule should be adopted. Joseph B. Auer¬ 
bach, credit manager of Bloomingdale Bros., New York, 
quotes the following as a typical example: 

Every day the bookkeepers are to list on specially provided sheets 
the name, address, folio number, amount owing up-to-date, and date 
of last payment on all accounts which are overbuying or referred 
for the first time as Over the Limit or Overdue. Also all accounts 
which have been referred and which are now O. K. shall be listed. 
These lists are then checked back against the indexes of the authorizers 
so that they may be corrected as noted. 

In some cases the customer must be sent for to come to the credit 
office. This is the case when a person has no account listed on a 
“charge-take” transaction. If it is a “charge-send” and no account 
is listed, it is the part of policy to send the goods C.O.D. 

Indexes.— Until the invention of the visible index the old- 
fashioned card filing system where cards were inserted verti¬ 
cally in drawers was used. This method was slow and often 
inaccurate, due to misplacing of cards. Visible records give 
all necessary facts at a glance. It is claimed by manufacturers 
of visible indexes that there is a saving of 75 per cent in labor 
cost because of increased speed in handling work. 

Colored fiberoid signal tubes are used for classification of 
accounts. A special color may be given to “slow pay,” “profit 
and loss,” “attorney,” etc. 

The index from which the authorizer passes a charge must 
contain: 

1. Full name. 

2. All addresses, residence and business, and shipping points. 

3. Limit. 

In addition, the refer authorized records should contain: 

4. Restrictions. 


CREDITS 


225 


5. Ratings. 

6. Business connections. 

7. Extra instructions (buying privileges). 

8. Number given filed information for reference. 

9. Signature. 

In many systems the information is much more complete. 

Securing New Charge Accounts. —There has been much 
discussion in the past as to whether or not a store should 
solicit charge accounts. Stores which hold to the belief that 
credit is essential as a business-builder are firm in adhering 
to the policy of using legitimate methods of obtaining new 
charge customers. Stores which hold that credit is a necessary 
evil, but should be kept down in so far as possible, extend 
credit only to those customers who ask for it. 

Methods of soliciting charge accounts vary with the differ¬ 
ent stores. Bloomingdale Bros., one of the most aggressive 
credit stores, conduct a regular mail campaign, employing test 
letters and following up leads carefully. 

Another method frequently used is to take the names of 
customers paying cash and having packages sent, and re¬ 
quest their continued patronage in a well-framed letter, point¬ 
ing out the advantages of a charge account at the particular 
store. One store pays each salesclerk a bonus of one dollar 
for each charge customer introduced at the credit office by 
her. Bonus is paid when new customer pays first bill. 

The Fair, at Chicago, has used a method of slipping a card 
into each package leaving the store, whether carried by cus¬ 
tomer or sent to her. It reads in part: 

Dear Customer—It happens almost every day that some of our 
customers ordering goods sent C.O.D. have not the proper change 
handy when the driver calls or are not at home when the order is 
delivered, thereby suffering delay, annoyance, and inconvenience. 
Of course, you understand our drivers are not permitted to leave 
merchandise in cases of this kind, so in order to overcome this 
difficulty we recommend a charge account. 

By taking advantage of this accommodation you save time in 
shopping as well as avoiding delays and inconvenience in returning 
merchandise; also the necessity of carrying large sums of money. 

15 


226 


THE MERCHANTS’ MANUAL 


It is claimed that this method proved highly successful in 
obtaining new and profitable accounts. 

One point in regard to credit accounts which is frequently 
overlooked is the old charge account which, for some reason 
or other, has fallen off. Figure 44 shows the method used by 
Boyd-Richardson, of St. Louis, in reminding former custom¬ 
ers that they have not purchased anything for some time. 
This method has been found profitable. 

The credit manager should always work in close cooperation 
with the complaint department, yet he should also remember 
that the customer who complains is comparatively easy to 
handle in contrast to the offended customer who merely stops 
buying at the store and says nothing. The credit department 
should formulate some follow-up system for customers who 
have not purchased for some length of time, especially those 
whose former purchases were considerable. 

In some establishments, the credit manager has also the 
direct supervision of the book adjustment department, there 
generally being two adjustment bureaus in the house, the one 
representing sales and service and the other supervising all 
transactions having to do with the bookkeeping details of the 
accounts. Where this is possible, the credit manager naturally 
can control the situation a great deal more closely than if he 
is dependent on some other persons. 

As already mentioned, the credit manager is sometimes a 
member of the firm or granted a corresponding degree of 
authority, so that he is responsible to no one except the 
general manager or some other officer of the concern. 

There are so many things for which a credit manager is 
responsible and in the case of establishments doing a large 
annual business he is so completely responsible for such a 
large portion of a firm's assets that, instead of its simply 
being referred to as the “Credit Department/' the credit 
department is put on the same basis as any other sales branch 
of an establishment. For this reason there is a closer bond of 
sympathy between the officers of a store and its credit depart¬ 
ment. Often the sales force does not realize and, as a matter 
of fact, does not know anything about the serious problems 
with which the credit office has to contend. One of the chief 


CREDITS 


227 




STATEMENT 



BOYD-RICHARDSON 

A COMMON-LAW TRUST 


OLIVE AND S I XT H 


SAINT LOUIS 


Richard Roe 

1363 Noname AVe. 
City 


Terms* 30 Days, detach this stub and mail with CHecK S- 


STATEMENT FROM BOYD-RICHARDSON. RETAIN FOR YOUR RECORD. 


Date 


Items 


You have been too good a 
stay away from Boyd’s so 

The Credit Department is 
ious to have you realize th 
we should be happy to serve 

BOYD’S, 

Boyd-Richar 

G. B. 

Cred 


Charges Credits Balance 


custom 

long. 

very 
at as al 
you. 


dson 


HAAR 
it Manag 


er to 

anx* 

ways 


notice—The last figure in thc Balance** column represents the total 

AMOUNT OF THIS BILL. 

PURCHASES AND CREOITS OF LAST THREE DAYS OF THIS MONTH WILL APPEAR ON 
NEXT MONTH S STATEMENT. WHEN REMITTANCE IS MADE BY CHECK. WE DO NOT MAIL 
RECEIPTED BILL UNLESS REQUESTED. 


Fig. 44.—Reminder sent to customers who have made no recent purchases. 


















228 


THE MERCHANTS’ MANUAL 


duties of the credit manager is to educate the various forces 
of his store to understand just what the credit office must do 
in opening and handling a charge account. Where this is done 
and where the credit manager allows himself to get into 
friendly but not too intimate contact with the heads of other 
departments, his labor is materially lessened and he frequently 
finds himself delivering a better grade of service to his cus¬ 
tomers than would have been possible without the friendly 
assistance on the part of his co-workers. 

In the same manner must the credit manager have the 
ability and take the opportunity to educate his customers as 
to what is gained by a customer in creating and maintaining 
good credit. In other words, in addition to being a credit 
man and trying to safeguard his store’s interests from a 
dollar-and-cents point of view, he must also be a teacher to 
train a store’s customers to buy and pay properly and to train 
his employees and members of his staff so that they in turn 
may further the process of education. 



CHAPTER XVIII 


COLLECTIONS 

Credit Losses. —One of the foremost authorities in the 
retail credit field estimates that the percentage usually charged 
to profit and loss by credit departments ranges from y 68 of 
1 per cent to % of 1 per cent. In a few exceptional cases it 
has run as high as % of 1 per cent. The National Retail Dry 
Goods Association found that among the larger stores credit 
losses on total sales ranged from %0 of 1 per cent to % of 
1 per cent. Some of the New York specialty stores average 
about 80 per cent of charge sales to total sales, while the 
average amount of such stores as Franklin Simon and Com¬ 
pany, Lord and Taylor, B. Altman and Company, James 
McCreery and Company, etc., range from 50 to 60 per cent. 

Figures showing the proportion of outstanding charge ac¬ 
counts throughout the year vary on account of the conditions 
and buying habits of the community in which the store is 
located. Most stores anticipate a turnover of their charge 
accounts every sixty days. The total outstanding accounts 
of January 1 are expected to be paid up by March 1. This 
indicates a fairly good collection for the average depart¬ 
ment store. During certain periods of the year collections 
vary and consequently outstanding accounts assume greater 
percentages. 

The following figures are those of a New York store cater¬ 
ing to a popular class clientele, and they show the percentage 
of outstanding accounts after the tenth of each month: 


January. 

.61M 

July. 

. 58^ 

February. 

.58^ 

August. 

. 42** 

March. 

. 61** 

September. 

. 55** 

April. 

. 64** 

October. 

. 62** 

May. 

. 61** 

November. 

. 59^ 

June. 

. 57M 

December. 

. 59^ 


229 

















230 


THE MERCHANTS ’ MANUAL 


The financial analysis of percentage of loss naturally de¬ 
pends on the type of store and clientele. Very exclusive and 
high-priced stores can hardly expect to be over-strict on their 
charge account business, although one high-grade haber¬ 
dashery store on Fifth Avenue allows no accounts to run over 
60 days. 

A mid-western store doing a business of $5,000,000 annually 
sets up % of 1 per cent of total charge business as a reserve 
for doubtful accounts. 

The following departmental figures, based on percentage of 
total sales, are quoted by Dwight E. Beebe in his book en¬ 
titled “Retail Credits and Collections.” These figures, he 
states, are the result of an investigation based on close analy¬ 
sis of credit figures from the books of thousands of stores and 
are believed to be fairly representative. 


Furniture . 

,. 1.94 

Dry goods.. 

.21 

Groceries .. 

.. .47 

Department store ... 

.19 

Clothing . 

.. .34 

Drugs. 

.19 

Vehicles and instruments... 

. .33 

Shoes . 

.19 

Hardware . 

.. .31 

Variety goods . 

.... no loss 

Jewelry .. 

.. .21 




It is to be noted that dry goods and department stores are 
well down on the list. 

Limits.—The credit office should see that limits are closely 
watched since as soon as they are exceeded all charges should 
be referred to the head credit authorizer. As the report of the 
Retail Credit Men’s National Association says, 

absolute control over limits can be accomplished only by checking 
each sale with the account and by keeping the billings and postings 
up-to-date. This may be regulated by subdividing the authorizing 
system according to ledger subdivision. A more liberal system of 
control over limits may be provided by first checking all sales of 
considerable amount with the account before authorizing, and by 
providing over-limit slips by which the billing clerks should report 
all accounts over the limit to the divisional credit manager. 

C. H. Critchett of Jordan Marsh Company, Boston, Mass., 
investigates each case of over-limits individually, paying care¬ 
ful attention to business, references, manner of paying, and 
amount of previous purchases. In his experience he has found 












COLLECTIONS 


231 


that many accounts exceed the limit and the bills are paid 
promptly although information on file does not warrant the 
volume of purchases made. 

In case the customer wishes to make a purchase involving 
a considerable amount of money, such as in house furnishings, 
a special arrangement is made in many instances whereby an 
extension is granted. Figure 45 shows form in use to notify of 
exceeded limits and indicates whether increase in limit is to 
be temporary, or to be permanent, or whether the account is 
to be closed. 


Name. 

NOTICE OF EXCEEDED LIMIT 

Date.192. ... 

Address. 




PURCHASES 


Month 

Amts. 

Temporary Increase to. 



Change Limit to. 



Stop Account. 



Signed.'. 

Present Limit. . . . 


Credit Office 


Fig. 45.—Notice of exceeded limit. 


Overdue Accounts.—The best collection results are said 
to be obtained by a combination of telephoning, letters, per¬ 
sonal calls by collectors, telegrams, local association collection 
letters, reputable collection agencies, and attorneys. 

A knowledge of the history of an account is essential when 
methods of collecting must be resorted to. The indiscriminate 
use of form letters is not to be advised, although form letters 
are valuable in many cases. It is always advisable to treat 
customers who have paid promptly over a long period of time 
with leniency as facts would seem to indicate some legitimate 
reason for not settling the account. 

The telephone is coming into favor as a method of ascer¬ 
taining the exact status of an overdue account, both for the 
rapidity of action obtained and the effect on the customer. 






















232 


THE MERCHANTS' MANUAL 


Some stores have advocated, in addition to regular collec¬ 
tion methods, the serving of notice upon all charge customers 
that on and after a certain date interest at the rate of 6 per 
cent will be calculated upon all accounts which have been 
running more than thirty days. While it is perfectly reason¬ 
able to make the customer pay for the use of the money, it is 
obvious that for such a system to prove successful it would 
be necessary to have it adopted generally. 

The Retail Credit Men’s National Association recommends 
that there should be no hesitation in putting the collection 
system into operation the moment an account becomes over¬ 
due. It suggests the following system, the arrangement to 
be lexicographical, collection cards being made for all accounts 
on the ledgers. 

A flexible paper collection card is made when the account 
is opened. The amount is entered by the bookkeeper, accounts 
analyser, assistant or credit clerk, if a bill is rendered at the 
end of the month. Each month is indicated by the figure it 
represents in the calendar year, as “1” for January. When 
an amount is not owing, there is no entry made for that month. 
The card contains the name, address, two lines for remarks, 
date of bill or statement rendered, amount and space for pay¬ 
ments on the left margin thereof. 

Reports of collectors, promise-to-pay letters from customers, 
etc., are checked on front, in space for each month received, 
and entered on back of card. The cash payments should be 
posted by the bookkeepers or analysers. Small slips can be 
placed as markers on unpaid accounts which are overdue, 
according to the terms of sale. 

This assists the divisional credit men in their collection 
work. The bookkeeping department should enter the new 
amounts each month and keep the records in good condition. 
They also file the collection cards for new accounts. The 
analyzing of accounts in this system would be done by divi¬ 
sional credit managers. The card contains the date account 
was opened, credit rating, and amount of account desired, as 
requested at time opened, or subsequently, and the limit; by 
whom applicant was interviewed; who approved the account; 


COLLECTIONS 233 

by whom application was signed, and references given. The 
telephone number may also be entered. 

Closing the Account.—According to Edward Thompson, 
of Saks and Company, the reasons for closing an account may 
be grouped under four main headings: 

1. Slow pay. 

2. Unfavorable information. 

3. Goods returned or other conditions affecting the profit 
of the account. 

4. Closure because of disputes or unsatisfactory dealings. 

It is generally agreed that slow pay is the reason for the 

majority of accounts closed. The object is always to retain 
the good will of the customer while taking whatever means are 
necessary for the collection of the account due. 

Unfavorable information may be either of a financial nature 
such as bankruptcy, or separation and divorce proceedings, 
etc. In case of bankruptcy of the husband, it is frequently 
customary to mail the wife an agreement which she may sign 
in her own name authorizing the account to be continued. 

Mr. Thompson suggests the following letter to be used in 
closing an account because of the large number of returns: 

In examining your account we notice that a large portion of goods 
charged are returned for credit. 

You can readily understand that the expense of deliveries, and 
then calling for goods, the routine bookkeeping in charging and 
crediting, and the depreciation in handling merchandise, and the 
fact that it is out of our stock for several days, all combine to make 
it unprofitable to continue the account; we have therefore closed 
this account on our books and hope to continue to serve you on a 
cash basis. We will also be pleased to reopen the account if you will 
assure us that in future transactions at least 65 per cent of the goods 
will be retained and not returned to us for credit. 

Disputes and unsatisfactory dealings are constantly arising, 
despite the effort to the contrary. When all efforts for a 
diplomatic settlement have been exhausted nothing remains 
but to close the account. 

METHODS OF COLLECTION 

Telephone.—The advantages of the telephone as a method 
of collection are appreciated by a large number of stores. It 


234 


THE MERCHANTS ’ MANUAL 


has been found that it reduces the work of the collector by 
a considerable percentage because the status of the account 
is nearly always determined by results of the telephone con¬ 
versations. The person in the credit office who does the tele¬ 
phoning has the ledger and other customer records in front of 
him and can give any information desired by the customer. 
Where the collector or the dunning letter merely serves to an¬ 
tagonize the customer the telephone frequently will straighten 
matters out. 

Henry Raines, of the Townsend, Wyatt and Wall Dry Goods 
Company, St. Joseph, Missouri, states that his store has done 
away with collectors entirely, using the telephone as substitute. 
By not having the telephone listed if the customer is not at 
home when the call is put in, it is possible in almost every 
case to leave word to have her call back. 

When bills are gone through the last of the month, those 
that are to be telephoned are laid aside. When the customer 
is called for the first time the conversation is opened something 
like this: 

In looking over your account, we find you owe a balance of $., 

which is (so many months) past due; and we were just wandering 
if it had escaped your attention, etc. 

If the customer promises to pay a note is made of it. In fact, 
note should be made of any definite statement which the 
customer may make to prevent later misunderstanding. If it 
is down in black and white the customer cannot well refute it. 

If customers do not pay according to their promise over 
the telephone they are called a second time. 

The third time it is necessary to call, the customer is 
informed that the store is a member of the Credit Bureau and 
will be compelled to give unfavorable information regarding 
the customer as a credit risk. 

Collecting in rural districts by telephone has proved espe¬ 
cially efficacious, due to the customer’s dislike of the publicity 
which rural lines frequently give to the subject matter of 
conversations carried on ov3r them. 

Letters.—Debtors are usually classified under four head¬ 
ings: 



COLLECTIONS 


235 


1. Prompt pay. 

2. Slow pay. 

3. Bad pay. 

4. Will not pay or judgment proof. 

The first two categories form the mainstay of the store’s 
business. The latter two must be eliminated as rapidly as 
possible. 

When an account becomes overdue, whether in thirty, sixty 
or ninety days, according to the store’s policy, it is trans¬ 
ferred to the collection department. The usual process is a 
system of letters. The fault with the average collection letter 
is its lack of personality and the danger of using too mechani¬ 
cal a system. For example, in some stores bills are received 
by customers the first of the month; on the fifteenth of the 
following month a statement is sent again; ditto on the 
twenty-fifth accompanied by No. 1 letter; on the tenth of 
the following month No. 2 letter; the twenty-fifth of the same 
month No. 3 letter, and a notice during the third month that 
if the account is not settled in 10 days it will be transferred 
to the store’s attorneys. Without great care such a system 
will become void of all personality and consequently will fail 
in its purpose—that of collecting the money and retaining 
the customer’s good will. 

T. V. Gould, credit manager of Oppenheim, Collins and 
Company, believes, however, that the follow-up system is 
undoubtedly the secret of successful collecting. In his opinion, 
this is best accomplished by using what is known as the 
“Diary Dating System,” consisting of two or three sets of files 
or folders numbered consecutively from 1 to 31 and repre¬ 
senting the current month and the two succeeding ones. 

Whenever a letter is written requiring an answer the dupli¬ 
cate is filed under the date set for a reply. In addition, all 
promises of payment by a certain date are filed under that 
date. Great care must be used to see that the bookkeeper 
notifies promptly of all payments on overdue accounts in 
order that letters may not be sent on accounts which have 
already been paid. 

Form letters will differ, and should differ, according to cir¬ 
cumstances, store policy, and the individuality of the credit 


236 


THE MERCHANTS' MANUAL 


man. Wm. H. J. Taylor, credit manager of Franklin Simon 
and Company, recommends the following two letters as having 
been very successful: 

The first letter is used when an account is not long overdue. 
It reads as follows: 

Dear Madam: 

We desire to call your attention to the enclosed statement of your 
account which is long past due, as bills are payable monthly, that is, 
within thirty days from date of bill. This is in accordance with 
terms agreed upon by you at the time your account was opened. 

We cannot afford to carry accounts on our books unless bills are 
settled within the thirty-day period, and we must, therefore, ask you 
to send us a check by return mail in settlement of your account. 

The charging of merchandise in the future will depend upon the 
prompt payment of bills. 

The second letter is used when no replies have been received 
to the first letter or to other letters couched in similar lan¬ 
guage. The tone is much more strict. 

Dear Madam: 

We have written to you repeatedly stating that your account is 
long past due, and are surprised that you do not give the matter 
attention. 

We, being members of the Associated Retail Credit Men of New 
York City (representing the leading retail merchants in various 
lines), are required to report to the association the names of those 
whose accounts are long past due, but before doing so we are desirous 
of conducting negotiations with you in confidence and with the 
utmost fairness, and are sure you appreciate the value of a good 
credit standing, not only with us, but with all merchants where you 
have an account. 

Under the rules of the Associated Retail Credit Men of New York 
City, we will be required to report your name as being in arrears in 
settling your account with us unless you send us a remittance within 
the next few days, and, furthermore, we will hand your bill to our 
attorney for collection. 

Trusting you will not force us to take these unpleasant steps, we 
are- 

As T. V. Gould said before the Associated Retail Credit 
Men of New York, there is an ever-present tendency in collec- 





COLLECTIONS 


237 


tion letter writing to indulge in language and expressions 
which are not characteristic of the writer: 

Avoid stilted or conventional phrases and long involved sentences. 
The essentials of a good letter are clearness, terseness, diplomacy, 
persuasiveness, and forcefulness. Above all things, be dignified and 
courteous. Rudeness, bluntness, and sheer brutality will achieve 
little. 

Using excuses for collecting money due the store is poor 
policy as it weakens the strength of the demand. Nor should 
the store intimate that it would not ask for the money were 
it not in urgent need of money. The debtor will simply infer 
that the store is willing to wait longer. Slang and too great 
familiarity are not in good taste. 

Collectors.—The ability, manners, and dress of the outside 
collectors are all matters of much importance. Here again, 
the object is to retain the good will of the customer if this is 
in any way possible, and the method of approach of the 
collector will have much to do with this. 

The Retail Credit Men’s National Association says collect¬ 
ors should be assigned by districts or sections of the territory 
closely served by the store. By supplying collectors with 
automobiles the best service may be obtained. Care must 
be taken to see that automobiles are not used for other pur¬ 
poses and with this end in view they should be garaged with 
other automobile equipment at night. The use of the auto¬ 
mobile increases the speed of collections while reducing the 
number of collectors required. 

Collectors should report to the divisional credit manager 
in writing concerning each call. He should leave a memoran¬ 
dum of call whenever the debtor is not at home. The ordinary 
collector’s report contains ledger folio, name and address of 
customer, amount of debt, amount collected, and general 
remarks. It is made out in duplicate, one copy remaining at 
the office. 

Allowing the collectors a base salary with a commission on 
debts collected gives the necessary incentive for successful 
performance. 


238 


THE MERCHANTS' MANUAL 


Legal Means.—Handing accounts to attorneys for collection 
or taking legal methods to collect is always a last resort. In 
practically every case it means the final breaking off of rela¬ 
tions with the customer and in many cases the expense and 
trouble of obtaining returns through an attorney is not worth 
the money recovered. The store, furthermore, rarely wishes 
to bring suit against its customers, owing to the unfavorable 
reaction on the store. In many cases suit is brought through 
an assignee and the store’s name does not enter the matter 
at all. 

Many stores are opposed to obtaining judgments against 
customers. Arthur L. Zaduk, on the other hand, credit man¬ 
ager for Henri Bendel, believes that there are six reasons 
which render it advisable to obtain judgments. They are as 
follows: 

1. The life of the claim is automatically extended for 20 
years. 

2. The filing of the judgment makes it a lien against any 
real property which the debtor may own or become possessed 
of in the county where the transcript of judgment is filed. 

3. When a sheriff’s execution has been issued on the judg¬ 
ment, what are known as third-party proceedings may be 
instituted, that is, judgment creditors can tie up bank ac¬ 
counts, life insurance policies, debts due the debtor or property 
held for the debtor by other persons. 

4. Judgment creditors are given certain privileges in the 
matter of taking steps to set aside fraudulent transfers of 
property, which remedies are ordinarily denied to the ordinary 
creditor. 

5. In case the debtor dies during the life of the judgment, 
the judgment becomes a preferred claim on his estate. 

6. A judgment duly docketed is a permanent beacon light 
to warn all credit men from extending credit to one who has 
been adjudged a poor credit risk. Finally, if the debtor ever 
becomes solvent it is to his advantage to clean up back judg¬ 
ments against him. 

One argument against the judgment rests on the fact that 
it may drive the debtor into fding a voluntary petition in 
bankruptcy. 







COLLECTIONS 


239 


Instalment Plans.—In certain lines of goods, notably 
furniture, bedding, electric appliances, floor coverings and 
upholstery, it is frequently the practice to sell on some 
deferred-payment plan. In the vicinity of New York City, 
for example, the so-called “club” plan is used. The merchan¬ 
dise is sold at exactly the same price as though it were on a 
cash basis. A certain percentage, either 2 or 3 per cent, is 
charged for joining the club, the purpose of this extra charge 
being to reimburse the store for extra bookkeeping. It is made 
clear to customers that the extra charge is not put on as 
interest. 

Hahne and Company, of Newark, New Jersey, has used this 
plan successfully. In this case the first instalment must be 
no less than 20 per cent of the whole. The larger the first 
payment, the smaller the later monthly payments. Delivery 
is not made until the account has been investigated and the 
20 per cent payment made. Some stores require special refer¬ 
ences; first, who is the responsible head of the family; second, 
where and how such individual is employed, and from the 
employer is ascertained the standing of the person with the 
firm. 

In the ordinary case if the purchase is $100, the initial pay¬ 
ment is $20 plus the club fee, and the rest in weekly instal¬ 
ments of $2. Some stores insist on the customer’s paying the 
weekly instalment at the store, in order that more goods may 
be sold. Others accept payments by mail. The special case 
is always considered and arrangements made accordingly. 

Figure 46 shows the form of contract used by Gimbel 
Brothers, New York, as a conditional bill of sale in merchan¬ 
dise sold under the instalment plan. This is typical of other 
contracts. Certain features are common: 

1. The title and ownership remain with the store until full 
payment has been made. 

2. Provision for insurance or payment in case of loss by 
fire is made. 

3. The property shall not be re-sold or moved from the 
premises without the written consent of the store. 

4. If the purchaser fails to pay an instalment or otherwise 
defaults in living up to the conditions of the bill of sale, then 


240 


THE MERCHANTS’ MANUAL 


CONTRACT 


Gimbel Brothers, New York, a domestic corporation, hereinafter called the 

Seller, has this.day of.sold conditionally. 

.hereinafter called the Purchaser, residing at. 

City.one. ..style. 

No.and.of the value of 

.Dollars payable as follows. 

.Dollars on the signing of this agreement, 

receipt whereof is hereby acknowledged, and the balance in equal Monthly-Weekly in¬ 
stallments of.Dollars, payable on the. 

day of each and every Month-Week 

at the seller’s store, situated at Broadway, 32nd to 33rd Streets, in the Borough of Man¬ 
hattan,^City and State of New York, but should the purchaser make default in the pay¬ 
ment of any of the installments, or in the performance of any other term, covenant or con¬ 
dition to be performed by said purchaser, then the whole sum, less any payments made, 
shall at once become due and payable at the seller’s option, without any notice to the pur¬ 
chaser. 


The Title to Said Instrument is to Remain in the Seller until the Whole 
of the Purchase Price, or any Judgment for all or any Part of Same is Fully Paid 
and Satisfied. Should the purchaser make default in the payment of any installments 
or sell or offer to sell or mortgage or otherwise encumber, or remove the said instrument 
from the purchaser’s above said residence without the seller’s written consent, duly endorsed 
on this agreement, or should the seller deem itself insecure at any time, then the purchaser 
shall return the said instrument, on demand, to the seller; and the seller, its agents or repre¬ 
sentatives, may enter the premises where the said instrument may be, and take and carry 
the same away; and the purchaser hereby waives any action for trespass or damage and 
disclaims any right of resistance hereto, and also waives any and all notice of sale, whether 
public or private, and other benefits of whatsoever nature provided for under the laws of 
his or any other state, as well as all right to homestead and other exemptions. Should the 
seller retake the said instrument, then all the moneys paid by the purchaser under this 
agreement shall be applied as rental for the said instrument, and as liquidated damages for 
the breach of this agreement by the purchaser and for any damage to or depreciation of 
value of the said instrument; provided, however, that the purchaser is to remain liable for 
any installments due and unpaid prior to the retaking of the said instrument. 

The purchaser shall keep said instrument insured in the sum of. 

Dollars in a reputable insurance company and assign the policy to the said party of the 
first part, the said party of the first part agreeing that in case of loss by fire to pay to said 
party of the second part the excess of money received from such insurance over and above 
the amount of said purchase money then remaining unpaid. 

The purchaser hereby agrees to use the said instrument in a careful and proper 
manner, and to keep same in good condition, and to permit the seller’s agents to enter the 
premises where said instrument may be to examine it from time to time, as the seller may 
elect. 


The seller’s failure to enforce the performance of any term to be performed on the 
purchaser’s part shall not be deemed to waive any other or subsequent obligations on the 
purchaser’s part to be performed. 

In Witness Whereof, the parties hereto have hereunto set their hands and seals in 
triplicate, the day and year first above written. 

Gimbel Brothers, New York, (L. S.) 


In the presence 


by 


(L.S.) 





















COLLECTIONS 


241 


(Reverse side of Contract reads as follows) 

Reference 

Married.Wife’s 

Husband’s first name.Age (over 21?). 

Lived in house how long.Occupation. 

Employed by.Employer’s address. 

Employer’s address. 

How long employed. 

Use lines below, to whom purchaser can refer for further reference. 

Reference’s name. 

Address. 

Name.. . 

Address. 

.19 


Sale No. 

Name. 

Address. 

Terms. 

Date.19... . 

.Manager 

.Teacher 

Entered on Sale Card by. 

Contract Examined by. 


This is to certify that the undersigned 
read and fully explained to the purchaser 
the terms and conditions of this sale before 
having it signed, and purchaser thoroughly 

understands that a payment of. 

must be paid each and every subsequent 

.until the machine 

is paid for in full. 


Fig. 46. —Installment Plan Contract. 


the goods immediately become the property of the store again 
without notice. 

The problem frequently comes up of what should be done 
with merchandise re-possessed under the bill of sale. In some 
cases the salvage is high and in others low. The department 
which made the sale should not be held responsible for any 
losses which may occur due to difficulties in receiving pay¬ 
ment for the merchandise. It has fulfilled its duty when the 
sale is closed. 

It does not seem fair when the judgment of the credit de¬ 
partment is wrong, or the purchaser is unable to meet his 
obligation due to unfortunate circumstances, to have the de¬ 
partment stand the loss. Some stores meet this situation by 
having set aside for each department selling merchandise on 
the instalment plan a fund known as “reserve receivables.” 
This fund is set up from month to month, the amount depend¬ 
ing upon the volume of business done by the department. 

16 



























242 


THE MERCHANTS’ MANUAL 


When a loss is incurred in salvaging the merchandise which 
is repossessed, the same is charged against this fund and the 
department suffers no other loss. The buyer of the department 
is then given the right to purchase this merchandise back at 
whatever figure he thinks he can sell it at. Eventually the 
result is the same and the stockholders must stand the loss, 
but under this plan it does not affect the profits made by the 
various departments to so great an extent unless a depart¬ 
ment were so unfortunate as to have this thing occur fre¬ 
quently within a short space of time. 

The Morris Plan.—The Morris plan has received much 
publicity as an improvement over old instalment methods. 
There is a Morris Plan Bank in almost every large city 
throughout the United States, but the Morris Plan retail 
trade acceptance business is managed by the Industrial 
Finance Corporation, the parent organization of all Morris 
Plan banks. 

The Morris Plan Retail Trade Acceptance is a time draft 
growing out of a bona fide sale of a commodity. Time of 
payment cannot extend over twelve months; the article cannot 
be of doubtful utility or merit; and a substantial cash pay¬ 
ment must be made. Figure 47 shows the form of agreement, 
the bill of sale and acceptance being on the same form, the 
customer signing only twice. 

There are very few department stores using the Morris Plan 
at present, but it has been generally taken up among retail 
furniture concerns. One advantage of the plan to merchants, 
as explained by the Morris Plan Company, is that it enables 
them to conduct their business on a cash basis and at the 
same time to increase the volume of their sales by extending 
the benefit of time payments to their customers at prices 
lower than can be fixed by instalment houses with capital tied 
up in hundreds of outstanding accounts. 

A simple example of a purchase on the Morris Plan is given 
by the company: 

A purchaser wishes to buy apparel worth $125 at the cash 
price. The salesman says to him: 

Pay $25 down. Pay $10 a month for ten months to the Morris 
Plan Bank, making the total of $125. To carry your account the 


COLLECTIONS 


243 

Your account runs ten 


bank will charge you 6 per cent a year, 
months, making this charge $6. 



DUPLICATE 


(Copyright, 1918, Industrial Finnic* Corpo r ation. All rights reserved.) 


CONDmONAL SALE AGREEMENT 


Na» 


a hi* fo 


•rm to be 1150(1 in all states except Colorado, Illinois, Louisiana. Maryland. MirAlp*, 
Missouri, Montana, New Jersey, Ohio, Pennsylvania, Texas and Wisconsin.) 


THIS AGREEMENT, Made this. 


.day of. 


19 . 


between 


his or its successor*, Agents or assigns. 



Purchaser acknov^e 
agrees in consideration t 
Trade Acceptance mature 


Total Purchase Price - 
Cash Payment on Total Purchase Price - 
Amount of The Morris Plan Retail Trade Acceptance 

leipt of above named articles (hereinafter referred to as the “Goods") in good order, and 
fo pay the Seller the purchase price in the sum and in the manner above set out. The said 
^months from date thereof, and is to be offered for discount to - 


(hereinafter called “Company”) 


The conditions of this agreement are that the delivery of the goods by Seller to Purchaser does not pass title thereto, 
but that title thereto shall remain vested in Seller until said Acceptance is fully paid by acceptor. 

(Conditional Sale Agreement continued on next page.] 



This is the first page of the Trade Acceptance and Conditional Sale Agreement which is signed by the customer. 
The form of the Conditional Sale Agreement varies in different states. The Trade Acceptance is printed on the 
same sheet as the Conditional Sale Agreement, but the perforated line enables it to be detached. Note 
that the form calls for a full description of the goods sold, their manufacturer and selling price. 


Fig. 47.—Sales agreement form. 

Pay a total of $30 to us now. Sign this retail trade acceptance 
which is a legal promise to pay the remaining $100. If you wish 
to do this we will deliver the goods today. You will receive the full 




























































244 


THE MERCHANTS’ MANUAL 


benefits of our cash price and will pay only $5 to obtain the benefit 
of ten months’ credit. 

The retail trade acceptance, which is endorsed by the mer¬ 
chant, is discounted by the bank at 6 per cent and thereafter 
the bank handles the entire transaction, relieving the merchant 
of all details of collecting and recording the time payments. 
For the privilege of being relieved of these details the mer¬ 
chant pays a service fee to the bank at a fixed rate, according 
to the amount of the purchase. In the example above the rate 
is 2 per cent. Thus, a merchant receives a total of $93 cash 
for the retail trade acceptance and a total of $123 cash for 
the sale of the apparel. 

The Retail Trade Acceptance.—The retail trade accept¬ 
ance is used somewhat in Canada and more extensively in 
France, but it has never been tried out in any of the big stores 
in this country. The retail credit men do not favor the use 
of the Retail Trade Acceptance as they claim among other 
disadvantages that it places the store too much in the hands 
of the bankers and it is not in accordance with good merchan¬ 
dising practice. 

In using trade acceptance and the Morris Plan the store 
guarantees the payment of a note, and if the customer defaults, 
the store is held liable for payment to the bank. 


CHAPTER XIX 


STATISTICS 

The larger the store the more necessary it is to have a sys¬ 
tem of control which permits the visualization of operations, 
without making it necessary for the executive to come into 
direct contact with each activity. The more pointedly the 
salient facts are brought out, the better able the executive will 
be to make decisions in accordance with them. It is the pur¬ 
pose of statistical systems to make available the strategic facts 
in summary form. 

Possibly one cause of department store success has been the 
necessity under which executives find themselves of having to 
relinquish personal for statistical control. The latter method 
removes the motives of prejudice and partisanship which are 
almost inevitable in the closer personal contact which is found 
in the small store. Yet, no matter how small the store, it. may 
be stated that statistical analysis is a condition precedent to 
efficient control. 

The more progressive merchants, realizing this fact, have 
made much headway in the use of statistics, and many stores 
now have statistical departments. Precisely what the func¬ 
tion is of a statistical department may be set forth only in 
general terms, for practice varies widely. But in this chapter 
a few examples are chosen, at random, showing how statistics 
may be used to increase efficiency. These examples are purely 
illustrative. 

Scope of Statistics.—The value of statistical presentation 
for use by others than the controller has not been generally 
recognized. Statistics in the past have been gathered mainly 
for operating information in the form of monthly balance 
sheets, operating statements of sales, return purchases, ex¬ 
penses, and stocks of the business as a whole and by depart¬ 
ments. Valuable as such statistics are, there is no question 

245 




246 


THE MERCHANTS’ MANUAL 


but that the use of store statistics can be extended much fur¬ 
ther. Their value in the personnel field has already been 
recognized; their application to market research is rapidly 
coming into prominence. 

Statistics for use by merchants are of two kinds—those 
gathered by outside agencies which can be applied to the 
store’s general financial and merchandising policies, and those 
which are gathered directly by the store itself for application 
to its own internal problems. 

The value of comparative statistics for a number of stores 
in the same line of activity is also becoming recognized. 

Business Barometers.—Generally speaking, the trends in¬ 
dicated by outside statistics are beyond the control of the 
merchant, while figures which he gathers himself in many 
cases point out conditions which can be immediately rectified. 
Yet the former type of statistics, commonly known as busi¬ 
ness barometers, are almost equally important in planning for 
the future. As Dr. Secrist, of Northwestern University, says: 

The retailer’s service and his profit, so far as the future is con¬ 
cerned, depend, among other things, upon the prices which he has to 
pay for the services, supplies, and materials which he uses and sells; 
upon the availability of credit; upon the markets which are open 
to him; upon his customers’ whims, fancies, and psychological 
reactions, and upon other hazards to which he is subjected. More¬ 
over, they depend upon his costs of operation. 

Business barometers are developed from statistics relating 
to fundamental business conditions. Certain sets of figures 
have been found by experience to bear a definite relation to 
business activity. These barometers may be concerned with 
banking conditions, speculative activities, or with increases 
and decreases in production, together with more particularized 
data. The study of barometers becomes a study in prediction. 
They foretell to those who can read them what business con¬ 
ditions should be. The more accurate the data and the more 
closely allied the barometers, the more nearly will the pre¬ 
diction approximate the actual result. 

Business barometers are furnished in digested and tabulated 
form by several agencies, and are published in many journals 


STATISTICS 


247 


daily, weekly and monthly. Merchants may accept the inter¬ 
pretation of others or judge for themselves. It is necessary to 
stress the necessity, however, of tracing the connection be¬ 
tween the barometers used and the activities to which they are 
applied. Efforts hitherto have been mainly towards predicting 
business trends as a whole. The science of business forecasting 
is just entering the phase where it may be applied to a par¬ 
ticular group activity. 

Comparative Statistics.—One of the fundamental prin¬ 
ciples of retailing at one time was to keep everything relating 
to the conduct of the business a secret, not only from com¬ 
petitors but from customers as well. Price tags could be read 
only by those connected with the store. The owner alone 
knew what turnover and profits were. 

The disappearance of this jealousy of competitors, and the 
recognition that exchange of information may be positively 
beneficial to all concerned has done much for retailing. Com¬ 
parative statistics of several stores in the same line of activity 
are made possible only through cooperation. The function of 
a national association as a clearing house for such information 
is especially important. Table III shows one type of com¬ 
parative statistics as prepared by.the National Retail Dry 
Goods Association. Such statistics cannot fail to be instruc¬ 
tive and beneficial. Other elaborate statistics are prepared by 
the Harvard Bureau of Business Research. 

Store Statistics.—The bulk of the merchant’s statistical 
information comes from within his own store. The basis for 
such statistics is a good record system and a method of digest¬ 
ing information for executive use and for departmental prac¬ 
tice. Each store will work out a system differing in particulars. 
A standardized method of accounting, however, will serve as a 
guide for the preparation of major statistics. The connection 
of accounting with statistics is necessarily close and inter¬ 
related. As E. R. Clarkson, of the Kaufmann Department 
Store, Pittsburgh, says: 

While accounting will, on the one hand, compile, organize, and 
interpret the sales, purchases and finally profits, statistics in a larger 
sphere will organize and compile data and information which will 
effectively control and anticipate them. 


248 


THE MERCHANTS’ MANUAL 


Table III —Comparison of 


STORE NUMBER 
LOCATION 


GROCERIES 
HANDKERCHIEFS 
HOSIERY MEN'S 


ART EMBROIDERY 
ART GOOOS 
BATHING SUITS 


BEDDING , BLANKETS 

BOOKS 

boy's clothing 


BOY’S FURNISHINGS 

CANDY,SOOAS, ETC. 
CARPETS. LINOLEUMS 


CHINA , GLASSWARE 

CORSETS , BRASSIERES, ETC, 
DOMESTICS 


DRESS GOODS 

DRUGS 

FURNITURE 


FURS 

CLOVES MEN’S, 

• WOMEN S ftt CHILDRENS 


WOMEN’S (t childrens 

HOUSE furnishings 
infant's WEAR 


JEWELRY, SILVERWARE, ETC. 

KNIT UNDERWEAR MEN'S 

• • women's 


children’s 


LACES 

LEATHER GOODS 


LINENS 

men's CLOTHING 
■ FURNISHINGS 


MILLINERY 
MUSLIN UNDERWEAR 
NECKWEAR 


NEGLIGEES , ETC. 

NOTIONS 

PATTERNS 


READY TO WEAR 
COATS WOMEN'S 
* MISSES 


Merchan dise. 


Gross Profits 


67 60 70 73 80 81 02 83 

MASS IOWA MASS N,Y* OHIO INO. VA. IND. 


.385 .297 .405 .320 .412 

.385 .297 .423 .320 .342 .412 

.334 


.405 


•32C .399 .333 .450 .279 

.312 
336 .364 


.310 

.435 .320 


.360 .230 .336 .384 


.371 


.410 .420 .397 


,400 .415 


.334 

.446 .334 
_ 


.237 .304 

,379 .305 .382 .405 

^279. 


.394 .345 .410 .333 .304 .283 .362 .360 

.362 .371 

.*222 -Jll. 


• 384 

.305 .343 

205 ,343. 


.165 
.305 .455 
.315, .367 


.295 

.320 

,289-.2?o 


.260 

.299 

.299 


.384 .387 

^o< ;2e? 


.3e9 .320 
l£o 


jJLIL 


T46 - 

.404 .410 
-208-.284 JS82. 


.315 .367 .374 .360 .311 .300 .383 .387 

.232 ^ .334 .237 .304 

.390 .261 .374 .334 .217 .305 .562 .405 


391 .360 .320 .303 .377 .343 

.355 .461 .360 .308 .384 .387 

.355 .461 .374 .360 .308 .383 .387 


.355 .461 .360 .300 .3e3 .387 

.338 .405 .420 .283 

- 39 i-i . 2 75 .293 . 320 ,217 ^377 ..M3. 


.320 .381 .359 .323 .279 

a £10 _ .360 .263 

742675137261 

.355 .304 .372 .334 .235 
.391 .352 .407 .320 .282 


310 .304 .560 

.336 

.336 .394 


7356 .334 

.338 .335 .429 .320 .331 
,643 .466 .333 .359 


.445 .165 .391 

.382 .405 
349 .410 


.305 .382 .405 

.317 .416 .343 
.366 .360 


.278 .253 .295 
.278 .253 .295 


.334 .260 
.334 .260 

.334 .217 

.334 

>334 


,218 .296 

,218 .362 


.301 

.301 

7465 

.301 

.301 


* Stock 


x> 

67 


68 


* 

70 


«> 

73 


80 


MASS IOWA MASS N.Y. OHIO 


2.40 2.12 
2.40 2.12 


2.4C 1.64 


2.32 1.93 
2.56 1.93 1 
i 


9C 


T7 Z 3 


1.70 

l,.40.2 t ,6S> 


1.99 1.71 

i.6e 


2.30 3.69 


3.14 

2*99 


2.16 

3.74 3.35 


1.00 

1.60 


2.37 

4.01 


2.27 1.63 1.61 

1.66 


1.90 

1.20 

1.20 


7.70 

1.20 

1*00. 


2.92 

2*92 


4.53 

-LO0 


2.10 

1.93 2.10 

■1a93.- 2 >-' 0 , 


3.92 

1*24 


3.00 


3.00 

2.50 

1.40 


3.24 

JJ4 


3.01 

1±1L 


1.93 
JLl99 2 . 00 . 


1.99 2.80 
2.16 

U4 2.22 


1.90 3.41 1.95 2.06 

1.40 1.94 1.99 

1.40 1.94 3.01 1.99 


1.40 

0.99 

1.90 


T794" 

2*22 


2.32 

2*27. 


2.40 3.14 2.99 

1.70 


1.99 

1.25 

± 41 — 

1.63 1.51 


1^9-2.85 


2.40 13.20 5.42 

1.40 2.97 2.60 3.74 2.26 
1.90 3.06 2.82 1.93 1.89 


2.40 3.74 

0.99 2.21 4.53 1.93 2.18 
2.74 2.67 1.63 1.55 


3.30 

3.30 

TTZq 

3.30 

1*20 


4.58 4.53 3.74 5.64 
4.56 4.53 3.74 5.64 


■ childrens 

SUITS WOMEN'S 
* MISSES 


.390 .253 .295 

.278 .207 .295 
.278 .287 .295 


SKIRTS WOMEN'S 
" MISSES 

DRESSES WOMEN'S 


.353 

.353 
.278 .232 


MISSES 

children's 


RIBBONS 


SHOES MEN’S 

• WOMEN'S 

• children's 


SILKS & VELVETS 
STATIONERY 
TOILET GOODS 


TRUNKS , BAGS, ETC, 
TOYS 

UMBRELLAS 


UPHOLSTERY GOODS 

VEILINGS 

WAISTS 


WASH COOOS 


.278 .232 

.390 .232 
->-305 .386 


334 

.334 

.334 

7334 

.334 .217 
,. 22 , 0 , ..375 


,305 .382 

,218 .296 
,218 .362 


,210 .296 

218 .382 

218 .296 


.301 

.301 

.301 


4.58 4.53 3.74 2.22 

8.32 4.53 3.74 

8 « 3-2 — 4*11 3.74 


,218 .362 

,305 .382 
■317 .349 


.301 

.405 

.410 


3*30 


5.51 

5.51 

5.71 


3.74 

3.74 
V 


3.30 5.71 3774 

1.40 5.71 3.74 2.22 

1.20_3.54 1.93 2.05 


246 .218 
,246 .210 


,295 .355 .410 .333 .329 
.335 .310 .320 

.335.320 .259 


.357 .334 

332 .208 .371 

.309 


2 e 3 .362 .360 
.312 .343 
37i .343 


336 .450 .395 

.304 .395 


1.70 3.03 2.27 1.63 2.67 

3.20 1.37 1.93 

3.20 1.93 1.96 


276o 

2.50 2.81 


350 .371 

.352 .320 

156,375 .396 .334 .262 
309 


.450 .362 

.349 .410 
218 .296 .301 


3.08 


3.74 

1.60 


1.20 


.424 


1.68 

3.06 I .93 

.2*40 4.06 3.49 3.74 4.38 


?10 


1.90 


7.58 


STOCK TURNOVER - 

STORE NO. 67 F|CURES TURNOVER BY 01VI01NG AVERAGE STOCK AT RETAIL INTO YEARLY SALES. 

STORE NO. 68 FIGURES TURNOVER BY DIVIDING AVERAGE STOCK AT COST INTO SALES. CAPITAL TURNOVER 

STORES NO, 70 , 73, 80, 01 & 62 FIGURE TURNOVER BY OIVIDING AVERAGE STOCK AT COST INTO YEARLY SALES AT GOST 

STORE NO. 03 FIGURES TURNOVER BY OIVIDING INVENTORY AT COST INTO YEARLY SALES. CAPITAL TURNOVER 







































































ST A TI ST ICS 


249 


Statistics in Percentages. 


Data 


Turnover 

Mark Downs 

Inventory 

Shnnkoqe . 

# if # 

61 02 83 

INO. VA. IND. 

# it 

67 60 70 OO 01 

MASS IOWA MASS OHIO INO, 

* * # # 

67 70 80 81 

MASS MASS OHIO INO. 

STORE NUMBER 

* 

LOCATION 

3.25 

3.25 

5.30 

.041 .042 .024 
.041 .042 .032 .046 

.005 .015 

.005 +.012 .012 

ART EMDROIOERY 

ART COOOS 

BATHING SUITS 

3.50 3.^70 

6.00 

2.50 2.75 

.020 .070 

.025 

.0C3 

.042 

BEOOINC , BLANKETS 

BOOKS 

BOY’S CLOTH|f£ 

2.50 2.75 

2.20 3.50 4.20 

7041 .07 6 .025 

.048 .010 .020 

.003 .042 ,042 

1.025 .011 

boy's furnishings 

CANDY, SODAS , ETC. 

CARPETS, LINOLEUMS 

4.80 5.25 

4.50 4.50 3.90 

3.70 

.062 

.019 .020 .005 .016 .049 
.021 

.093 

.000 .002 4.020 .042 

4.051 

CHINA, GLASSWARE 

CORSETS, BRASSIERES, ETC. 
DOMESTICS 

3.10 2.50 3.70 

5.00 

.040 .025 .005 .101 .024' 

.025 

.053 

4.C21 4.057 .019 .059 

.017 

DRESS GOODS 

ORUGS 

FURNITURE 

2.75 3.70 

3.00 3.70 

.049 .135 .089 

.043 .062 .004 

.043 .062 .022 .004 

.005 .003 4.006 

.035 .014 

.035 .004 .014 

FURS 

GLOVES MEN’S 

GLOVES WOMEN'S & CHILDREN’S 

0.00 

3.00 5.30 

3.50 2.75 7.40 

7ozy 

.043 .044 .022 

.019 .014 .019 .023 

.035 .004 

.010 .002 .030 

6R0CERIES 

HANOKERCHIEFS 

HOSIERY MEN'S 

3.50 4.00 7.40 

4.60 5.25 

4.50 4.50 4.40 

.039 .014 .000 .019 .0£3 

.036 .062 
.070 .016 .067 .161 .049 

.018 + .004 .002 .038 

.019 „ .093 

.008 .019 .063 .042. 

HOSIERY WOMEN’S & CHILDREN'S 

HOUSE FURNISHINGS 

infant's wear 

6.00 4.20 

3.50 2.75 l k 0O 

3.50 4.00 1.00 

.045 .052 .056 

.027 .019 .023 

-027 .019 .008 .023 

4.011 .038 

.011 .030 

.011 4.004 .030 

JEWELRY, SILVERWARE, ETC. 

KNIT UNOERWEAR MEN'S 

" " women’s 

3750 4700 1.80 

3.10 

3.00 6.00 4.20 

.027 .019 .023 

.115 .024 .113 .024 

.045 .125 .053 .040 

.011 .030 

.042 .015 4.C47 .059 

4.011 4.054 .024 

" children's - 

LACES 

LEATHER GOODS 

3.70 3.50 4.10 

2.50 

2.50 2.75 

.028 .012 .021 .038 .027 

025 

.041 .039 .*025 

.003 +.051 .031 .012 

.042 

.003 +.004 .042 

LINENS 

men’s CLOTHING 
men’s furnishings 

13.50 2b.00 12.50 

4.50 3.90 

3.25 5.30 

T 232 .060 .172 .066 

.027 .023 .007 .110 

.045 .034 .065 .061 

4.020 4.026 .031 .002 

.011 .017 .044 

4.011 4.073 .014 

MILLINERY 

MUSLIN UNOERWEAR 

NECKWEAR 

4.50 4.50 5.30 

3.00 3.75 7.20 

6.75 4.00 

7043 7675“ 

.115 .021 .013 .042 .040 
.003 .002 

.050 .042 

.042 .02S .009 .024 

.034 +.006 

NEGLIGEES , ETC. 

NOTIONS 

PATTERNS 

3.00 7.50 9.10 

3;C0 4.50 9.10 

.075 .008 .135 .175 .105 
.075 .008 .135 .175 .105 

.001 .003 .018 .114 

.001 .003 .018 .114 

RCAOY TO WEAR 

COATS WOMEN'S 
• MISSES 

4.50 4.50 4.40 

3.00 7.50 9.10 

3.00 4.50 9.10 

.070 .000 .135 .161 .049~ 

.075 .003 .135 .105 

.075 .003 .135 .105 

.008 .003 .063 .042 

.001 .003 .114 

.001 .003 .114 

-” 1 CHILOREN'S" 

SUITS women’s 
" MISSES 

3.00 7.50 b.50 

3.00 4.50 6.50 

3.00 7.50 13.40 

.006 .105 

.006 .105 

.075 .002 .105 

.114 

.114 

.001 .114 

SKIRTS WOMENS 

" MISSES 

ORESSES WOMEN'S 

3.00 4.50 13.40 

4.50 4.50 4.40 

3.00 3.25 4.20 

.075 .002 .105 

.070 .002 .161 .049 

.C43 .012 .041 .040 

.001 .114 

.000 .063 .042 

.035 .054 4.079 .024 

" MISSES 

• children’s 

RIBBONS 

2.00 2.00 

2.00 2.00 

.050 

.050 

.064 

.064 

SHOES MEN'S 

• women's 

• children’s 

3.10 2.50 3.50 

6 00 4.20 

5.00 7.20 

.053 .025 .005 .039 .024 

.026 .062 

.026 .027 

.047 +.057 .010 .059 

.006 

.006 .037 

SILKS & VELVETS 

STATIONERY 

TOILET GOOOS 

2.50 3.50 6.50 

5.25 6.50 

.025 .025 

,036 .013 

.022 

.042 

.019 

.004 

TRUNKS, BAGS, ETC. 

TOYS 

umbrellas 

3.50 3.40 

3.25 5.30 

3.00 7.50 6.50 

.019 

.034 

.043 .004 .074 .093 .105 

.006 

.050 4.010 .01 6 .114 

UPHOLSTERY GOOOS 

VEILINGS 

WAISTS 

3.70 

.006 .026 .027 

4.00064.001 .012 

WASH GOOOS 



















































250 


THE MERCHANTS' MANUAL 


Store statistics may be divided into several classifications: 

1. Merchandise statistics, usually compiled for the con¬ 
troller’s office. 

2. Personnel statistics. 

3. Non-selling departments. 

4. Errors and system. 

In addition, there are many uses for statistics mentioned 
in special places under planning and under research. 

Statistical Requirements.—In compiling statistics there 
are certain fundamental requirements. For example: 

1. Accuracy. It is not only unwise but dangerous to base 
actions upon figures which are not absolutely correct. In some 
cases, of course, approximate accuracy is as good as absolute 
accuracy. In each instance the circumstances must decide. 

2. Basis of comparison. Facts should be compared over a 
period of years. Thought should always be given as to 
whether the periods over which comparison is made are normal 
or otherwise. In addition, great care must be used in com¬ 
paring one set of statistics with another to make sure that 
there is a sound basis of comparison, in other words, that one 
set of figures has some definite relation with the others. 

3. Arrangement. Statistics must be arranged according to 
some definite plan, either of time, size, or other unit of v 
measurement. 

4. Comprehensibility. The statistical compilation must be 
understandable. The number of columns must not be so 
many as to confuse the eye nor so long as to make compre¬ 
hension of relative values difficult. 

5. Utility. No statistics should be gathered merely for the 
sake of collecting them. Each should have a definite use or 
application. Otherwise the labor involved is wasted. 

There are various methods of making statistical compari¬ 
sons, some of the most common being by means of: 

Percentages. 

Index numbers. 

Arithmetical averages. 

Weighted averages. 

Frequency. 


STATISTICS 


251 


Graphs.—Charts and diagrams give strong, vivid impres¬ 
sions. The aim must always be for simplicity if the desired 
effect is to be obtained. Thus, in a line chart, the most com¬ 
mon type, the number of lines should not be too many, and 
what hnes there are should be strongly differentiated as by 
colors or dot-and-dash construction. Too much overlapping 
of lines renders the chart unintelligible. 

Similarly, while one pie chart may be effective for com¬ 
parison of its component parts, a series of pie charts gives no 
opportunity for accurate comparison and is therefore com¬ 
paratively useless. 

There is a natural tendency to overestimate the value of the 
graph because of its pictorial possibilities. It can never 
entirely take the place of the statistical table. Its function is 
to drive home the point of which the statistics furnish the 
proof. 

The impression which a chart makes is largely dependent 
upon the manner in which the statistics are graphically pre¬ 
sented. There is no standard. There are certain rules which 
the maker of graphs learns, but the method of applying these 
rules are legion. Thus the spacing can be different, the size 
different, the scale of comparison different. 

Men who are trained in accounting departments are often 
inclined to discredit the use of charts because, to them, the 
statistical table is plain and the conclusions to be drawn are 
evident. But when these same statistics are presented to an 
executive without accounting experience, even though they 
are digested and condensed, they often fail to convey their 
message. A chart will, many times, accomplish this result, 
and will aid in the comprehension of the figures. 

In preparing charts and statistical tables it is always neces¬ 
sary to keep the audience in mind. The less familiar the 
audience is with the subject matter, the simpler the chart 
must be. 

Analysis and Application.—Interpretation of statistics 
and graphs is a matter of training and judgment. The appli¬ 
cation will vary with the end in view. Certain sets of statistics 
will be valuable for the control of expense, others for the 
making of plans and formulation of policies, others for cor- 


252 


THE MERCHANTS ’ MANUAL 


rection of inefficiency and errors in service departments, etc. 
A better idea can be obtained by taking up some of the special 
sets of statistics. 

Management Statistics.—Monthly balance sheets and 
operating statements are compilations of statistics. They 
show whether the store as a whole is making money and what 
departments are profitable. A standard of performance is 
also set up for each month in the year. Furthermore, they 
show allocation of expenses in each department for adver¬ 
tising, salaries, etc. 

The controller usually will require the following sets of 
statistics: 

1. Monthly balance sheets. 

2. Store operating statement. 

a. Sales. 

b. Expenses. 

c. Stocks. 

d. Etc. 

3. Department operating statements. 

a. Sales. 

b. Returns. 

c. Purchases. 

d. Expenses. 

1. Administrative. 

2. Occupancy. 

3. Publicity. 

4. Buying. 

5. Selling. 

6. Etc. 

e. Stocks. 

f. Net profits. 

g. Miscellaneous. 

If statistics are compiled in terms of dollars it is necessary 
to supplement them with tables showing number of sales, 
divided into charge, cash, and C.O.D. sales, number of returns, 
and average sale for each division and selling department in 
quantities. This practice is especially important in times of 
inflation when sales apparently increase rapidly while volume 
of business may actually be on the decline. 

With such data in hand, the management can tell instantly 


STATISTICS 


253 


which departments are weak and can set about remedial 
efforts. 

Merchandise Statistics.—Merchandise statistics are ex¬ 
tremely important. They are treated at length in the section 
of merchandising. Some of the more important divisions are: 

Stock turnover. 

Stocks on hand. 

Mark downs. 

Inventory shrinkages. 

Merchandise control, etc. 

Control of Selling and Non-selling Departments.—E. R. 

Clarkson recommends a careful system of statistics for the 
control of employees in selling and non-selling departments. 
The efficiency of the personnel does not vary with the price, 
however, but with the time required to sell the article, or the 
time required to do the particular job on hand. 

In the selling departments, for example, the unit of pro¬ 
duction is the number of sales. For each department statistics 
should show: 

1. Number of sales. 

2. Number of salespeople. 

3. Number of non-selling employees. 

4. Number of employees for each 100 or 1,000 sales, accord¬ 
ing to the department. 

5. Average salary of the department. 

For the non-selling departments, the unit of measure must 
be the time required to perform a particular task, and the 
number of employees required in a particular department. 
Following are Mr. Clarkson’s suggestions for statistical con¬ 
trol of personnel in non-selling departments: 

1. Number of inspectors for each 10,000 sales. 

2. Average salary of inspectors. 

3. Number of cashiers for each 10,000 sales. 

4. Average salary of cashiers. 

5. Number of employees in the controller’s office, and num¬ 
ber for each 10,000 sales. 

6. Average salary in controller’s office. 

7. Number of employees in audit department, and number 
for each 10,000 sales. 


254 


THE MERCHANTS' MANUAL 


8. Average salary in audit department. 

9. Number of employees in bookkeeping department for 
each 10,000 postings, and average salary. 

10. Number of employees in accounts payable division for 
each 1,000 bills, and average salary. 

11. Number of employees in credit office for each 10,000 
charges, and average salary. 

12. Number of employees in adjustment department, num¬ 
ber of complaints handled, and number of employees for each 
hundred complaints. Also average salary. 

13. Number of employees in receiving and marking depart¬ 
ment, and number for each 10,000 tickets. 

The above statistics show results from the production point 
of view which is the correct aspect from which to study non¬ 
selling departments. 

Credit Statistics.—For proper control of charge accounts 
credit statistics must be studied carefully by means of statis¬ 
tics. For effectiveness in collections and reserves necessary 
for doubtful accounts, the following are important: 

1. Number of accounts opened. 

2. Number of accounts given to attorneys for collection. 

3. Percentage of collections. 

4. Number of accounts closed. 

5. Number of inactive accounts during the month. 

6. Analysis of number and amount of accounts due less 
than thirty days, thirty to sixty days, sixty to ninety days, 
and over ninety days. 

If instalment accounts are opened special sets of statistics 
will be required, notably the number of accounts opened, the 
total down payments, the total sales, the number of months 
required to pay, and the number and amounts of repossessions. 

Delivery Statistics.—Owing to the necessity of keeping 
delivery expense at the minimum, expenditures and per¬ 
formance in this department are particularly susceptible to 
statistical treatment. With certain information such as 
odometer readings, tire mileage, quantity of gas and oil con¬ 
sumed and packages delivered, the following sets of statistics 
may be prepared: 

1. Average miles per day per car. 


STATISTICS 


255 


2. Average units delivered per car. 

3. Miles per gallon of gasoline. 

4. Cost accounts giving cost of repairs, cost per mile, 
average cost per package, average cost per car per day. 

5. Cost of delivery in each locality. 

6. Cost of delivery of special articles, such as furniture, 
house furnishings, pianos, etc. 

Errors and Systems.—Practical working systems are 
founded on statistical averages. One method of checking up 
systems is by the number of errors committed. Errors in one 
department frequently mean a great deal of added work in 
other departments. For example, errors in the delivery de¬ 
partment increase work in the auditing department, etc. Con¬ 
trol of errors by statistical means brings about their reduction 
to a minimum. 

For example, the adjustment department is a clearing house 
for errors on the part of the store. By use of the sub-slip 
these errors can be tabulated in statistical form. For example, 
there will be shown: 

1. Number of adjustments made where transaction was 
traced as far as the clerk and no farther. 

2. Number of parcels lost by driver in transit and amount 
of money involved. 

3. Number of adjustments where packers left merchandise 
out of parcels. 

4. Number and amount of cashiers’ shortages when cus¬ 
tomers claim not sufficient change received. 

5. Number and amount of parcels damaged in inside 
delivery. 

6. Number and amount of adjustment for overcharges to 
customers, under credits, shortages of merchandise, wrong 
goods received, undercharges, crossed labels, merchandise re¬ 
turned to department not credited, etc. The possibilities for 
statistical tabulation are very large. 

Errors in the auditing department are frequently the source 
of much annoyance. Many stores give a bonus for keeping 
errors down. The best method of arriving at this bonus is 
by statistics: 

1. Sales number omitted. 


256 


THE MERCHANTS' MANUAL 


2. Omission of unit price. 

3. Incorrect extensions or additions. 

4. Altered checks. 

5. Omissions of department number or sales clerk number. 

6. Incorrect initials or spelling. 

7. Poor writing or carelessness. 

By keeping track of these errors in the auditing department, 
the educational division of the store can secure information 
of great value in training employees. 

A summary of complaints showing number received, num¬ 
ber adjusted, and those on hand unadjusted, is also valuable. 

The entire subject matter of this chapter is mainly sug¬ 
gestive. The compilation and application of statistics cannot 
be standardized beyond a certain extent, and will remain 
always an individual store problem. 


CHAPTER XX 


ACCOUNTS 

Uniformity of standards and uniformity of practice are the 
goals towards which retail accounting is aiming. Any dis¬ 
cussion of the problems of retailing must be based on this 
assumption. The Controllers’ Congress of the National Re¬ 
tail Dry Goods Association has been successful in formulating 
and securing the adoption in a large number of stores of a 
standard system of accounts for dry goods and department 
stores. The Harvard Bureau of Business Research also has 
done good work along the lines of standardization. 

The advantages of standardization are closely tied up with 
the solving of store problems through mutual cooperation and 
the consequent benefit therefrom. For example: 

1. It has long been difficult, if not impossible, to draw any 
accurate conclusions regarding retailing, owing to the diver¬ 
sity of standards. There was no clear definition of the ordi¬ 
nary terms used to describe retail operation, consequently 
stores did not speak in the same language. Any exchange of 
information regarding methods or practice was necessarily 
hampered. This difficulty became important when stores be¬ 
gan to realize the profit to be gained from mutual exchange 
of information, and was one of the principal reasons leading 
to the formation of a standard system of accounting. 

2. Under the old systems it was extremely difficult to an¬ 
alyze the reasons which made some stores profitable and 
others unprofitable. A comparative statement for various 
stores under a standard system shows clearly where the root 
of the trouble lies. 

3. Without a standard system of accounts it is necessary for 
the accountant to learn an individual system which may be 
of little use to him in the study of other systems. 

4. A standard system of accounts makes it much easier to 
meet government taxation requirements, especially as the 

257 


17 


258 


THE MERCHANTS’ MANUAL 


BALANCE SHEET 

(Name of Company) 
(Date) 


ASSETS 


Current 

Cash 

On Hand $ 

On Deposit $ 

Notes Receivable 

Customers $ 

Accrued Interest $ 

Less: Reserved for Possible 

Losses $ 

Accounts R eceivable 

Customers (Charge, C.O.D., Will-calls and 

Mortgage) $ 

Less: Reserve for Possible Losses $ 

Merchandise 

Inventory of Merchandise on Hand $ 

Merchandise Paid for in Advance $ 


U. S. Securities 

Bonds $ 

Certificates of Indebtedness 
Accrued Interest 

War Savings Stamps _$ 

Less: Reserve for Possible 

Losses $_$ 

Other Assets 

Securities Owned and Accrued Interest $ 

Stocks Owned 

Notes Receivable and Accrued Interest 
Insurance Deposits 

Cash Surrender Value of Life Insurance Policies 

Common Carriers Claims 

Land and Buildings—not used in Operations 

Personal Accounts $_$ 

Deferred Charges 

Unexpired Insurance Premiums $ 

Prepaid Interest 
Supply Inventory 
Prepaid Expenses 

Organization Expenses _$ 

Permanent 


Land $ Cost 


Leasehold $ 

Cost 

$ Amortization Sound Value 

Buildings 

Machinery, Fixtures and 

do 

Depreciation 

do 

Equipment 

do 

do 

do 

Delivery Equipment 

do 

do 

do $ 


Goodw ill, Patents and Trademarks $ 

Note: The amount of the merchandise in transit should be shown in a foot- _ 
note on the Balance Sheet at the close of each accounting period. $ 


Fig. 48. 































ACCOUNTS 


259 


BALANCE SHEET—Con*. 

(Name of Company) 

(Date) 


LIABILITIES 


Current 

N otes Payable 

For Money Borrowed from Banks ! 

For Money Borrowed through Brokers 
For Money Borrowed from Officers 
For Money Borrowed from Others 
For Purchases 
Trade Acceptances 
Accounts Payable 

For Merchandise and Expense Purchases ! 
For Federal Sales Taxes 
For Unredeemed Cash Refunds 
For Unredeemed Gift Certificates 
Leased Section Accounts 
Personal Accounts 
Accrued Accounts 

Taxes, Real and Personal—City, County and 
State ! 

Payroll 

Interest on Notes Payable 

Rent 

Expenses 

Funded Indebtedne ss 
Mortgages 
Bonds 
Reserves 

For Federal Income Taxes 
For Contingencies 




$ 


C apital Stock 

Preferred—Authorized 
Less: Unissued 
Common—Authorized 
Less: Unissued 
Profit and Loss—Surplus 
Surplus 

Undivided Profits 


Total Liabilities 
Proprietary Interests 



Note: In the case of a Partnership or Individual, Ownership, the “ Invest¬ 
ment Account” takes the place of ‘‘Capital Stock”; and “Profit and 
Loss, Current Account” in place of “Profit and Loss, Surplus.” 


$ 


Fig. 48.—Standard Form of Balance Sheet. 
































260 


THE MERCHANTS’ MANUAL 


modern tendency is for the government to demand increas¬ 
ingly detailed reports covering the operation of the business. 

5. In the past, the system of accounts grew up with the 
store. As new problems arose the system was not adapted to 
meet them. Under the new plan, the standard system pro¬ 
vides for its use by any store no matter how large or small. 
The expanding store will find the standard system perfectly 
practicable during all stages of its growth. 

The Balance Sheet.—The purpose of the balance sheet 
is to show the true financial condition of a company at any 
given time. It is used mainly for three purposes: 

1. Filing with income tax for government information. 

2. Evidence for granting of credit by banks, et al. 

3. Value to store for index of its own condition, as a cross- 
section of the business. 

Figure 48 shows’the standard form of balance sheet. Assets 
are grouped on the left-hand side and liabilities and proprietor¬ 
ship interests on the right. The practice of grouping similar 
items together allows an easier analysis of the entire balance 
sheet. 

A small store may not require all items reproduced in this 
illustration. In such a case it should be a simple matter to 
eliminate them. Larger stores, on the other hand, may find 
it necessary to add further subdivisions. Too great detail, 
however, in the balance sheet is to be avoided, as there is 
danger of losing sight of the essential facts. 

Assets vs. Liabilities.—Assets are defined as all available 
property and rights which can be applied in satisfaction of 
liabilities, or which can be turned into money or money’s 
worth. Assets are a list of things of value, exhibited with due 
regard to their liquidity. 

Liabilities consist of all sums due to outside creditors. Pro¬ 
prietary interests are represented by the excess of assets over 
liabilities. While assets represent the property of the busi¬ 
ness, the liabilities cover the extent of ownership thereof or 
interest therein. 

Assets are divided into current, other, deferred and perma¬ 
nent; liabilities into current, reserves and capital accounts. 

Current assets consist of cash or items which may readily 


ACCOUNTS 


261 


be turned into cash. Current assets usually include items 
which the store intends to turn into cash at the earliest prac¬ 
ticable moment. 

Other assets are those which are neither current, deferred, 
nor permanent. 

Deferred assets represent sums of money which have been 
spent and the benefit from which will accrue at some time in 
the future. 

Permanent assets consist of property and real estate for 
permanent or long-continued use. 

Current assets and current liabilities, taken together, are 
usually termed the operating section, the excess of liquid as¬ 
sets over current liabilities being an excellent index to finan¬ 
cial condition, and being known as working capital. 

The financial section, according to T. L. Blanke, Director of 
Accounting and Control for the National Retail Dry Goods Associa¬ 
tion, consists of capital or permanent assets and capital liabilities or 
proprietary interests, and shows the actual investment of capital 
contributed in fixed assets and in assets remaining unconsumed in 
the conduct of the business. The banker and grantor of short-term 
credits is interested particularly in knowing how much of the current 
assets will be available for the purpose of new material and the 
payment of new expenses, after provision has been made for liquidat¬ 
ing the existing accounts and notes payable. 

In the case of long-term credits the capital assets play a much 
more important part. The proportionate amount of fixed assets and 
the amount of capital provided for the business serve to indicate 
whether the business is being financed on borrowed money or paid-in 
capital, and determines whether or not the borrower will be able to 
pay loans at maturity. It is for the purpose of ascertaining this fact 
that banks generally request the settlement of all notes outstanding 
at least once a year. Should the concern be unable to meet this 
requirement it would indicate insufficient working capital, or that 
the working capital was tied up in undesirable assets. 

Current Assets.— Current assets ordinarily consist of: 

1. Cash. 

2. Notes receivable. 

3. Accounts receivable. 

4. Merchandise inventory. 

5. United States securities. 


262 


THE MERCHANTS’ MANUAL 


1. Cash. This includes cash on hand and on deposit with 
different banks. From the point of view of liquidity it is the 
most available asset and hence is listed first. For the benefit 
of the management the various cash funds and bank accounts 
should be listed separately. 

2. Notes receivable. This heading represents the face value 
of all evidences of indebtedness which are the property of the 
business and which are considered collectible, not including 
investments, however. Accrued interest on notes should be 
included in order to get the full present-date value. When 
notes receivable have been discounted at the banks, the lia¬ 
bility should be shown. The total of notes receivable should 
be stated, however, on the balance sheet, and the amount of 
discounted notes deducted, so as to show the net amount 
represented by notes on hand. 

3. Accounts receivable. This heading includes several classes 
of accounts with customers, notably charge, C.O.D., will- 
calls, and mortgages. It is necessary here to estimate the 
amount of bad debts in order not to overstate this heading 
under assets, and to set aside a reserve to cover possible losses. 

A reserve should also be set up to cover possible losses on 
notes and accounts receivable. Although it is customary to 
credit gross margin with the amount of excess of sales over 
cost of merchandise sold at the close of the accounting period, 
conditions may arise which will cause losses in the accounts 
during a certain period. It is, therefore, wise policy to provide 
for them out of the profits which the accounts brought about. 
Where this is not done it is impossible to tell from the balance 
sheet how much of the surplus is free for the payment of 
dividends. 

4. Inventory. The merchandise inventory account is usually 
subdivided into three sections: 

a. Stock on hand. 

b. Stock in transit. 

c. Stock paid for in advance. 

Merchandise on hand is charged with the opening inventory 
and net purchases, including transportation charges, and 
credited with the cost of merchandise sold, the remainder 
being the cost value of the merchandise on hand. Since the 


ACCOUNTS 


263 


accuracy of the profit and loss account is absolutely dependent 
upon the accuracy of the inventories of merchandise at the 
beginning and end of the period covered by the balance sheet, 
it is desirable that this item shall reflect the proper value. 

5. United States securities. Occasionally it is desirable to 
invest surplus funds in securities which may be converted into 
cash at any moment. The investment, therefore, is considered 
a current asset. Securities thus purchased should be entered 
at cost or at face value. If at face value the amount should 
be extended short and the discount deducted, carrying the net 
amount to the balance sheet. 

Other Assets. —All personal and impersonal accounts not 
included elsewhere are listed under other assets. Nine classi¬ 
fications are suggested as follows: 

1. Securities owned and accrued interest. 

2. Stocks owned. 

3. Notes receivable and accrued interest. 

4. Insurance deposits. 

5. Cash surrender value of life insurance policies. 

6. Common carrier claims. 

7. Real estate and buildings not used in operations. 

8. Personal accounts. 

9. Sundry accounts. 

Securities and stocks differ from the heading “United States 
securities.” 

Notes receivable include those taken from others than cus¬ 
tomers. Customer notes are listed under current assets. 

Insurance policy accounts will have to be adjusted from 
time to time in order to make them show actual value. 

Real estate and buildings purchased for future requirements 
of the business are carried at cost in separate accounts on the 
ledger. It is permissible to add the carrying costs of these 
lands and buildings to the original cost value, including taxes 
and interest. However, if carrying charges are added, it is 
suggested that a reserve be set up of the same amount because 
of the speculative nature of the transaction. This reserve 
may be transferred to surplus when the lands and buildings 
are put to use. 

Personal accounts include all accounts receivable from other 


264 


THE MERCHANTS ’ MANUAL 


than trade debtors, and are treated the same as customers’ 
accounts receivable. 

Sundry accounts include miscellaneous small accounts, al¬ 
though it is necessary to take care that important facts relat¬ 
ing to the financial condition of the business are not buried 
here. 

Deferred Charges.—“Deferred charges” indicates that pay¬ 
ment has been made of expenses properly belonging to a 
period subsequent to the date of the balance sheet and hence 
entitled to be reckoned as assets. For example, Figure 48 
provides for: 

1. Unexpired insurance premiums. 

2. Supply inventory. 

3. Prepaid expenses. 

In some cases no actual asset is represented, yet these ac¬ 
counts represent a prepayment or anticipation of an expense, 
and provide for the proper adjustment of net profits as be- 
between different fiscal periods. (T. L. Blanke) 

Permanent Assets.—Permanent assets ordinarily include 
those necessary to production and sale of goods; those which 
do not enter directly into the goods themselves; and those 
that are not the product of the sale. The real test of a per¬ 
manent asset is not the readiness with which it can be con¬ 
verted into cash but rather the condition in which the concern 
would be placed from the standpoint of efficient operation if 
the investment were disposed of. If the business would be 
hampered seriously, the asset should be regarded as per¬ 
manent. 

Permanent assets will generally fall into the following 
classifications: 

1. Land. 

2. Leasehold. 

3. Building. 

4. Machinery, fixtures, equipment. 

5. Delivery equipment. 

Depreciation should always be provided for, the amount to 
be based upon the best possible knowledge of conditions. 
Depreciation is not a disposition of part of the profits but 
rather an expense without which profits cannot be ascertained, 


ACCOUNTS 


265 


and such provisions for depreciation should be a deduction 
from the asset on the face of the balance sheet, as they repre¬ 
sent an estimate of losses actually incurred and must be de¬ 
ducted from the asset so that the true remainder value of the 
asset may be stated. (T. L. Blanke) 

Good Will, Patents, and Trade Marks. —Good will is an 
intangible asset, and can be valued only according to the re¬ 
sults which it brings about. The amount of the valuation 
cannot be arrived at with certainty unless the good will is so 
intimately bound up with personal reputation that it becomes 
purely personal and is thus not a matter which can be trans¬ 
ferred to other hands. 

One of the best definitions of good will is that given by the 
United States Circuit Court of Appeals in the case of Wash¬ 
burn vs. The National Wall Paper Company (81 Fed. Rep. 
20 ): 

When an individual, or a firm, or a corporation has gone on for 
an unbroken series of years conducting a particular business and has 
been scrupulous in fulfilling its obligations, and careful to maintain 
the standard of the goods dealt in, and absolutely fair and honest in 
its business dealings, that customers of the concern were convinced 
that their experience in the future would be as satisfactory as in the 
past; while such customers’ good report of their own experience tends 
continually to bring new customers to the concern, there has been 
produced an element of value quite as important—in some cases 
perhaps far more important—than the plant or machinery with 
which the business is carried on. That it is property is abundantly 
settled by authority and, indeed, is not disputed. That in some 
cases it may be very valuable property is manifest. The individual 
who has created it by years of hard work and fair business dealings 
usually experiences no difficulty in finding men willing to pay him for 
it if he be willing to sell it to them. 

The point which the courts recognize is that good will is a 
property right and, therefore, produces business. The meas¬ 
ure of its value must be determined to a large extent by the 
type of business considered. The basis, as used by most ac¬ 
countants, is to set up the value of good will, as derived from 
an equal investment. To get a more practical value of good 
will the following points must be taken into consideration: 

1. The annual amount of such surplus earnings. 


266 


THE MERCHANTS’ MANUAL 


2. The degree to which the good will may be transferred. 

3. Length of time during which it will continue. 

The determination of the amount of surplus profits is gen¬ 
erally based on the records of past experience and relies upon 
the accounts of the firm in computing its good will. How long 
a period should be taken in the survey is a delicate problem. 
A single year is not a sufficient period, for the high or low 
profits of that year may be due altogether to temporary con¬ 
ditions. Too long a period should not be considered, for the 
conditions of the remoter years may be so different from those 
prevailing at the time of valuation as to make the average of 
little significance. Generally the accepted periods are from 
three to five years. 

1. In determining the amount of surplus profits to be capi¬ 
talized, two distinct methods are used. One is to capitalize 
the entire net profits, and another way is to deduct from the 
net profits the assumed normal rate of profits on the capital 
actually invested, and then capitalize the remaining surplus 
earnings. 

2. The transferability of the excess income is a point which 
varies greatly. When a lawyer, physician, or other profes¬ 
sional man sells his good will, it is always a question as to 
how far the clientele which he has had is a purely personal 
matter. On the other hand, the surplus derived from an ex¬ 
clusive franchise of a street railway is clearly transferable. 
Between these two limits there is room for variation, depend¬ 
ing largely on the degree to which the personal element of the 
proprietor has been a determining factor in creating the 
profits. A large city department store, being almost a public 
institution, would come very close to the case of a transporta¬ 
tion franchise. 

3. The duration of the annual excess depends on two fac¬ 
tors: those having to do with competition, and those relating 
to general trade conditions. Error has been committed in the 
calculations of many large combinations in assuming the con¬ 
tinuance of large profits, where such is conditional on the ab¬ 
sence of competition. Similarly, a change in general trade 
conditions may have an appreciable effect on good will. 

Due to the variation in trade conditions and competition, 


ACCOUNTS 


267 


it is difficult to lay down a rate on which to capitalize good 
will. The best authorities on accounting practices have given 
rough estimates of from one to five years. In figuring the 
good will of large manufacturing firms, valuations from ten 
to sixteen years have frequently been used. Large city de¬ 
partment stores should be able to figure on ten years, and in 
some cases considerably longer. There is a limit, however, 
in that the Treasury Department specifically states that the 
good will, trade-marks, patent rights, etc., of an organization 
can be held at only 25 per cent of the total assets. 

Current Liabilities.—Current liabilities consist of notes 
payable, accounts payable, and accrued accounts. 

Notes payable are divided up into several minor classifica¬ 
tions, with a view to submitting the balance sheet as a basis 
of credit. These sub-headings are: 

a. For money borrowed from banks. 

b. For money borrowed through brokers. 

c. For money borrowed from individuals. 

d. For purchases. 

e. Trade acceptances. 

Accounts payable include all liabilities incurred by the 
store upon open accounts. Arranged in order of importance, 
these are: 

a. For purchases, etc. 

b. For Federal sales taxes. 

c. For unredeemed cash sale credits. 

d. For unredeemed merchandise orders. 

e. Employees’ deposit accounts. 

f. Dividends declared and unpaid. 

g. Leased section accounts. 

h. Personal accounts. 

i. Sundry accounts. 

Accrued accounts include services which have been rendered 
previous to the date of the balance sheet but unpaid on that 
date. It will include such items as taxes, payroll, interest, 
rent, advertising, traveling expenses, water, etc. 

Reserves.—A certain amount of surplus net earnings should 
be set aside in the reserve fund to meet contingencies. For 
example, when the balance sheet is submitted the amount of 


268 


THE MERCHANTS’ MANUAL 


the Federal income tax may not be known. It is, therefore, 
advisable to set aside a portion of the surplus to meet this 
requirement. 

Proprietary Interests.—The proprietary interests of a 
corporation consist of the capital stock and surplus profit and 
loss. Where a sole ownership of partnership is concerned, 
the capital accounts and undivided profits form the proprie¬ 
tary interests. The valuation to be placed on these is deter¬ 
mined by whatever values are put on assets and liabilities. 
Any changes in these are reflected in the proprietorship 
accounts. 

Provision has been made on the balance sheet illustrated 
for showing the total amount of the various classes of stock 
authorized with the amount unissued extended short on the 
balance sheet, so that the full information as to the status 
of the company can be shown. 

Surplus.—It is customary in corporation accounting to 
carry current profit and loss balance in an undivided profits 
account until the close of the fiscal year, and then transfer 
it to surplus. These accounts will show the amount available 
for dividends at the date of the balance sheet and constitute 
an addition to the capital of the concern. 

In the accounts of individual traders or partnerships the 
profit and loss current account is closed out at the close of 
the fiscal period and the balance carried to the credit of the 
capital account or accounts, as the case may be. 

The Operating Statement.—The operating statement de¬ 
notes progress, while the balance sheet determines position. 
It serves to resolve profit and loss into its component parts. 
It shows what past results have been and what future plans 
should bring forth. 

Figure 49 shows operating statements for small and large 
stores, the only difference being in the addition of further 
detail, fundamentals remaining the same. 

Starting with gross sales, they show how net sales are 
arrived at by the deduction of returns and allowances. De¬ 
ducting the cost of sales from net sales gives gross operating 
profit. Operating expenses are then deducted to give net 
operating profit or loss, and the application to this figure of 


ACCOUNTS 


269 


other income and deductions results in net profit or loss. 
After provision for Federal income tax, the final balance is 
transferred to current profit and loss, and the operating 
statement has accounted completely for all income and outgo. 

Sales.—The total of all sales, less any discounts granted 
to customers or employees, but before any returns or allow¬ 
ances are reckoned, is called the gross sales. It should be 
credited at selling price with all sales of merchandise pur¬ 
chased for resale at a profit, of merchandise manufactured in 
whole or in part by the retailer for sale, with alteration 
charges collected from customers, and receipts of restaurants 
and personal service departments. 

It should not include sales of waste paper, sales of discarded 
fixtures, or inter-departmental transfers of merchandise. The 
two former should be treated as reductions of expense. 

It is advisable to divide gross sales into gross cash, gross 
charge, gross C.O.D., and lay-away or will-call sales. The 
statement of gross sales may be further divided up according 
to departments of the store. 

The gross sales from leased sections, if there are such in 
the store, should be shown under gross sales rather than under 
Other Income. Although the merchandise is not the property 
of the store, the profits which accrue are made on the sale 
of merchandise at retail, and it is advisable to combine the 
total sales of merchandise within the store. 

The only reductions from gross sales should be credit given 
to customers for goods returned by them during the period. 
Returns and allowances not only represent a cancellation or 
reduction of selling price previously credited to gross sales, 
but are, in addition, an element of expense which produces 
no immediate return, and which should be included as a cost 
of obtaining the sales which stay sold. 

Out of net sales all items of cost or expense must be met. 
It is, therefore, taken as 100 per cent, and all subsequent 
percentages are based on this figure. 

The cost of sales includes: 

Inventory at beginning of period. 

Purchases net. 

Freight, express and cartage inward. 


270 


THE MERCHANTS 1 MANUAL 


Total inventory and purchases. 
Inventory at end of period. 
Gross cost of merchandise sold. 


Form for a Business Having No Leased Departments 


OPERATING STATEMENT 


(Name of Company) 
(Date) 



Month of 


Year to Date or 
( ) Months 

Income 



Sales 

Gross Sales $ 

Less: Returns and Allowances 


$ 

Net Sales 

$ 

$ 

Cost of Sales 



Inventory at beginning of period $ 

Purchases—Net 

Freight, Express and Cartage 

Inward 

o 


Total Inventory and Purchases $ 

Inventory at end of Period 

$ 


Gross Cost of Merchandise sold $ 

Discount Earned on Merchan¬ 
dise Purchases 

$ 


Net Cost of Merchandise Sold $ 

Alteration Costs 

$ 


Total Merchandise Costs $ 

Operating Expenses 

$ 


Cost of Sales 


$ 

Operating Profit or Loss $ 

Other Income and Losses 


$ 

Other Income $ 

Other Losses 

$ 


Other Income or Losses—Net 

Net Profit or Loss $ 

Provision for Federal Income Taxes 


$ 

Balance to Current Profit and Loss $ 


$ 

• 


Fig. 49. 


































ACCOUNTS 


271 


Form for a Business Having Owned and Leased Departments 


OPERATING STATEMENT 

(Name of Company) 

(Date; 


Month of 


Year to Date or 
( ) Months 


Income 

Sales 

Gross Sales—Owned Depts $ 

Less: Returns and Allowances _ 

Gross Sales—Leased Depts. $ 

Less: Returns and Alowances _ 

Net Sales 
Cost of Sales 

Inventory at beginning of Period $ 

Purchases—Net 

Freight, Express and Cartage 

Inward - 

Total Inventory and Purchases $ 

Inventory at end of Period _ 

Gross Cost of Merchandise Sold $ 
Discount earned on Merchandise 

Purchases - 

Net cost of Merchandise Sold $ 
Alteration Costs 
Merchandise Costs—Owned De¬ 
partments 

Merchandise Costs—Leased De¬ 
partments __ 

Total Merchandise Costs $ 

Operating Expenses—Owned 
Departments $ 

Operating Expenses—Leased 

Departments $_ 

Operating Expenses Total 
Cost of Sales—Owned Depts 
Cost of Sales—Leased Depts. 

Cost of Sales—Total 

Operating Profit or Los 
Other Income and Losses 

Other Income $ 

Other Losses _ 

Other Income or Losses—Net 
Net Profit or Loss 
Provision for Federal Income Taxes 
Balance to Current Profits and Loss 



$ 



$ 


$ 


S. 


$ 


Fig. 49.—Operating Statements. 

Discount earned on merchandise purchases. 
Net cost of merchandise sold. 

Alteration costs. 

Total merchandise costs. 



































272 


THE MERCHANTS 1 MANUAL 


Operating expenses. 

Cost of sales. 

Inventory at beginning of period is discussed under inven¬ 
tory at end of period. 

Purchases Net.—Purchases net is first debited with the 
invoice cost of all merchandise purchased for resale, less trade 
discounts which are an integral part of the purchase price, 
but before deducting cash discounts which are conditional 
upon the date of settlement. Purchases should be charged 
both with cost of materials bought for manufacturing depart¬ 
ments and with the manufacturing payroll and other expense. 

Transfers to a selling department should be made at total 
cost, the selling department taking credit for sales, when 
made, at full retail prices. Import duties and other charges 
on foreign merchandise, such as insurance, are a part of the 
cost of such merchandise and should be charged to purchases. 
The account is credited with all merchandise returned to 
manufacturers and with all allowances received from them 
on account of unsatisfactory merchandise. 

Freight, Express and Cartage Inward.—Under this head¬ 
ing are charged all inward transportation costs, since such 
charges are an additional cost of the merchandise rather than 
an expense. This is particularly important from the mer¬ 
chandise standpoint, since the cost of identical goods to 
merchants located at different distances from the central 
market is not the same, and mark-up comparisons between 
them will be misleading unless the variable factor of trans¬ 
portation is included in their merchandise costs. 

Transportation charges differ from expenses in their de¬ 
pendence upon the movement of merchandise inward, fluctu¬ 
ating in exact proportion to the volume of goods received. 
They are neither fixed nor controllable as are expenses. 

Inventory.—Total inventory and purchases is inventory 
at the beginning of the period plus purchases—net, and 
transportation charges inward. 

Inventory at the end of the period should be the inventory 
of merchandise on hand, taken at (a) cost or (b) cost or 
market, whichever is lower. The latter method is best if an 
overstatement of profits is to be avoided. 


ACCOUNTS 


273 


Under the retail inventory method, depreciation is auto¬ 
matically taken into account through markdowns, so that 
inventory at end of period is actual^ depreciated inventory. 
Inventory at the end of the period should consist of: 

1. The cost equivalent of the retail value of the merchandise 
on hand. This cost equivalent is obtained by applying to the 
retail value of the inventory the complementary cost rate of 
the average percentage of purchase mark-up; i.e., the per¬ 
centage rate reached by subtracting the latter from 100 per 
cent. 

2. Materials on hand in manufacturing departments. 

3. Manufacturing payroll and materials involved in work 
in process, unfinished jobs which have not been transferred 
from a manufacturing to a selling department. 

Under the cost inventory system, by use of a code system 
the inventory is figured at billed cost. Great care is necessary 
to see that the figure used is either cost or market, whichever 
is lower. Under the cost inventory system, inventory at end 
of period should consist of: 

1. Merchandise on hand at (a) cost, or (b) cost or market, 
whichever is lower, according to the method used by the 
merchant. Materials on hand in manufacturing departments 
should be included. 

2. Average rate of freight, express and cartage inward for 
the period, wherever the figure is obtainable. 

3. Manufacturing payroll and materials involved in work 
in process, unfinished jobs which have not been transferred 
from a manufacturing to a selling department. 

Merchandise Sold.—The gross cost of merchandise sold is 
total inventory and purchases less inventory at end of period. 

The discount earned on merchandise purchases may be 
treated as a reduction in cost of these purchases or as “other 
income” and credited at the bottom of the operating statement 
after net operating profit or loss is determined. 

The net cost of merchandise sold is gross cost of merchan¬ 
dise sold less the discount earned on merchandise purchases. 

Under alteration costs should be included materials used, 
wages and other expenses of alteration rooms. Added to the 
18 


274 


THE MERCHANTS’ MANUAL 


net cost of merchandise sold this gives merchandise costs— 
owned departments. 

Expenses are treated at length in the next chapter. In the 
operating account this item covers all expenses, both direct 
and indirect. 

The sum of total merchandise costs and operating expense 
gives the total cost of sales. 

Operating profit or loss is obtained by subtracting total 
cost of sales from net sales. 

Other Income, Etc.— Other income represents non-operat¬ 
ing income from sources other than the ordinary operations 
of the business as represented by the preceding items. The 
following items are typical of this classification: 

1. Rent charged to departments. 

2. Telephone rental, in payment for space occupied by pay stations 

in the store. 

3. Interest charged to departments. 

4. Discount earned on other than merchandise purchases. 

5. Sales of boxes, waste, etc. 

6. Interest on receivables. 

7. Interest on government securities. 

8. Interest on other securities. 

9. Dividends from investments. 

10. Miscellaneous. 

Other losses represent non-operating losses. Other income 
or losses net is simply other income less other losses. 

Net profit or loss is operating profit or loss plus or less 
other income or losses—net. 

The provision for Federal income taxes is not an expense 
but a sharing of profits with the government. It represents 
the portion of net profit necessary to satisfy the current tax 
laws. By subtracting it from net profit or loss the final 
balance to current profit and loss is obtained. 


CHAPTER XXI 


EXPENSES AND BUDGETS 

Cost accounting, or the classification and distribution of 
expenses, is a vital factor in the control and management of 
any retail store. The Controllers’ Congress of the National 
Retail Dry Goods Association has drawn up a standardized 
expense classification which, after careful trial, has proved 
successful in operation. It has been used by the Harvard 
Bureau of Business Research as a basis for studies of depart¬ 
ment store costs. 

Since operating conditions vary so greatly, the system has 
been drawn up in such a way as to be flexible. Both the 
smaller and larger store have been provided for, and in such a 
way that the expanding enterprise will find it readily possible 
to expand its cost system at the same time. 

For the small store the purpose is to .treat expenses as per¬ 
taining to the business as a whole. For the larger store there 
is a departmental classification of expenses which, neverthe¬ 
less, is a direct outgrowth of the single-unit classification. 

The basis of the standardized system of expense classifica¬ 
tion and distribution are the fourteen natural divisions, and 
the five functional group classifications. 

Natural Divisions of Expense. —The natural divisions of 
expenses are fourteen in number, arranged in the order of 
probable expenditure but without regard to function. They 
are shown on next page, with operating costs for department 
stores during 1921 and 1922 as ascertained by the survey of 
the Harvard Bureau of Business Research. 

These accounts can be expanded to suit the volume of busi¬ 
ness of the individual merchant, or perhaps his desire for 
detailed classification. 

The small store with the proprietor and one or two clerks 
is a functional unit. One man meets customers, sells goods, 
keeps stock, receives and ships merchandise, etc. Hence there 
would be no purpose in keeping accounts along functional 

275 


276 


THE MERCHANTS* MANUAL 


Operating Expenses, 1921 and 1922 in Department Stores with Net 
Sales of $1,000,000 and over —104 Firms 


Net Sales=100 Per Cent 


Salaries and Wages. 

Rentals. 

Advertising. 

Taxes. 

Interest. 

Supplies. 

Service Purchased. 

Unclassified. 

Traveling. 

Communication. 

Repairs. 

Insurance. 

Depreciation: 

Losses from Bad Debts 

Other Depreciation 

Professional Services. 

Total Expense. 


1921 

1922 

15.4% 

15.49 

2.9 

3.0 

2.7 

2.9 

0.6 

0.5 

1.9 

2.1 

1.0 

1.0 

0.6 

0.6 

1.3 

1.1 

0.4 

0.4 

0.2 

0.2 

0.2 

0.2 

0.3 

0.4 

0.2 

0.2 

0.5 

0.6 

0.1 

0.1 

28.3 

28.7 


lines. In such a store the fourteen items of expense would 
exist in their simplest form. 

1. Salaries and Wages.— Under salaries and wages is 
included all compensation to employees for salaries, wages, 
commissions, bonuses, P.M.’s, suppers, etc. 

2. Rentals. —Rentals include all rents paid for premises 
occupied, and interest on the valuation of owned premises. If 
the premises are leased and improvements have been made by 
the store, both rents paid and interest on the investment 
therein should be considered as rental. Proration of rentals 
to different departments of the store is treated later in this 
chapter. 

If any of the premises owned or leased are rented, the income 
and expense should be handled as a separate operating unit 
and not under this heading. 

3. Advertising.—Advertising includes all newspaper, peri¬ 
odical, and program space, street-car cards, billboards, cata¬ 
logs, circulars, electric signs, novelties and contributions hav¬ 
ing a direct advertising value. 

Taxes. —Taxes include all city, county and state taxes 
on land, buildings, fixtures, equipment and merchandise, 


















EXPENSES AND BUDGETS 


277 


moneys, accounts, etc., state excise or corporation, Federal 
capital stock, state taxes of outside buying offices and licenses. 

5. Interest.— Interest is included on the net investment in 
the business, except that on owned land and buildings or the 
improvements on leased premises which have been provided 
for under rent. 

The interest on merchandise should be computed on the 
average cost inventory at the end of the period; fixtures and 
equipment on the depreciated value at the beginning of the 
period; on all other assets used in the regular operation of the 
business, including cash, customers’ and employees’ notes and 
accounts, merchandise in transit and paid for in advance, de¬ 
ferred charges, and any other operating assets, less liabilities 
and reserves, but excluding capital stock, investment accounts 
of owners, and profit and loss or surplus. 

Liabilities having been deducted in computing net assets, 
the interest on borrowed capital, either notes or accounts, 
should be included. All interest earned on notes or accounts 
in the regular course of business should be credited to interest 
on notes and accounts referred to in preceding paragraph. 

Interest earned on investments outside of the regular opera¬ 
tions of the business should not be included under this heading. 

6. Supplies.— All supplies used in operating the business, 
including all items classed as supplies, and water, coal, gas, 
and subscriptions to publications, come under this heading. 

7. Service Purchased. —This division takes care of light, 
heat, and power, and delivery only when this class of service 
is purchased from outside sources. 

8. Unclassified. —Divisions not definitely provided for 
under other captions are herein included, and comprise classi¬ 
fied advertising, memberships and dues, entertainment, wel¬ 
fare, inspection fees, carfare, cashiers’ shortages, errors, dona¬ 
tions (cash), unauthorized purchases, discount not taken, etc. 

9. Traveling.— This includes traveling expenses incurred 
in connection with operating the business, including buying 
and selling. 

10. Communication.— Under this heading come all postage 
(except parcel postage on packages), telephone, telegrams and 
cable charges. 


278 


THE MERCHANTS’ MANUAL 


11. Repairs. —Repairs to buildings, fixtures, equipment, 
power plant, and delivery equipment should be included in 
this account. It consists of all ordinary repairs to buildings 
and equipment for which depreciation has not been provided 
for. New equipment or improvements properly chargeable 
to capital assets should not be included. 

12. Insurance. —All forms of insurance, fire, liability, 
sprinkler leakage, use and occupancy, theft, etc., are included. 

13. Depreciation. —Depreciation includes the amount con¬ 
sidered as covering amortization, wear, tear, and obsolescence 
of buildings, leasehold, fixtures, and equipment. Under this 
heading are also included losses resulting from, or reserve 
provided for, bad accounts. 

14. Professional Services. —This division includes all legal, 
accounting, secret service, and advertising professional ser¬ 
vices purchased, credit information, and collection costs. 

Classifications by Groups. —As soon as a store becomes 
divided into several selling departments with a definite space 
set aside for office activities, and perhaps before the owner 
has relinquished control of buying, there is felt a need for 
functional accounting, since the store is now run on a partly 
or completely functional basis. Hence it is necessary in any 
standard system to provide for group classifications according 
to the functions of the store, as follows: 

1. Administrative. 

2. Occupancy, including light, heat and power. 

3. Publicity. 

4. Buying. 

5. Selling, including delivery. 

Figure 50 shows these functional group classifications ap¬ 
plied to various classes of stores. No attempt has been made 
to place any limits on Class A, B, C or D, since the merchant 
himself can readily determine from the subdivision of func¬ 
tions into which class his store will fall. Some comparatively 
small stores are highly departmentalized. 

The administrative function includes executive offices, ac¬ 
counting offices, credit offices, superintendency and general 
store expenses. 

Under occupancy are grouped items applicable to maintain- 


Fig. 50.—Chart of functional group classification of expense and subdivisions thereof. 

A—Administrative B—Buying 

O—Occupancy S—Selling 

P—Publicity 


EXPENSES AND BUDGETS 


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Fig. 50.—Chart of functional group classification of expense and subdivisions thereof. 

A—Administrative B—Buying 

O—Occupancy S—Selling 

P—Publicity 


280 


THE MERCHANTS’ MANUAL 


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EXPENSES AND BUDGETS 


281 


ing the premises occupied, including fixtures and equipment. 
It also includes rentals of buildings or interest on owned 
premises, taxes, insurance, depreciation, light, heat and power, 
and cost of maintaining all buildings and fixtures, so that 
they may be used for retail purposes. 

Under publicity are included all items pertaining to news¬ 
paper, circular, billboard, and other forms of advertising, 
interior, exterior and window displays. 

Under buying are all items pertaining to the buying of mer¬ 
chandise and including merchandising offices, outside buying 
offices, merchandise comparison office, receiving, marking, and 
stock rooms. 

Selling covers all of the expenses necessary in the selling of 
the merchandise from the time it is received in the department 
up to and including the cost of delivery to the customer and 
including any adjustments made thereafter. 

The following table shows the natural divisions of expense 
according to functional groups. Salaries and wages are com¬ 
mon to all groups: 


ADMINISTRATIVE 
AND GENERAL 

1—Salaries and wages 

4— Taxes 
Interest 

5— Supplies 

7— -Unclassified 

8— -Traveling 
10—Communication 

Repairs 

12— Insurance 

13— Depreciation 

15 —Professional services 

OCCUPANCY 

1 — Salaries and wages 

2— Rentals 

4— Taxes 
Interest 

5— Supplies 
Service purchased 


7—Unclassified 
Traveling 

11— Communication 
Repairs 

12— Insurance 

13— Depreciation 
Professional services 

PUBLICITY 

1— Salaries and wages 

2— Rentals 

3— Advertising 
5—Supplies 

7— Unclassified 

8— Traveling 

10— Communication 

11— Repairs 
Insurance 

16—Professional services 

BUYING 

1—Salaries and wages 


2—Rentals 
Taxes 

5—Supplies 

7— Unclassified 

8— Traveling 

10—Communication 
Insurance 

Professional services 

SELLING 

1—Salaries and wages 
Rentals 
Taxes 
Interest 
5—Supplies 

Service purchased 

7— Unclassified 

8— Traveling 
Communication 
Repairs 
Insurance 
Depreciation 


Distribution and Proration.—While keeping the functional 
grouping of expenses, wherever possible expenses should be 
charged direct to the selling departments to which they apply. 
Charges to service or non-selling departments are redistributed 


282 


THE MERCHANTS 1 MANUAL 


to the operating or selling departments. For example, if the 
circular advertising department should prepare advertising 
matter specifically for the Millinery Department, the total 
cost of that circular should be ascertained and charged to the 
Millinery Department. 

Floor Space Rentals.— The importance of establishing a 
satisfactory degree of comparison in operating costs of stores, 
and the relatively high proportion of such costs appearing 
under the caption of occupancy, suggest the desired method of 
treating particularly upon the largest item placed under the 
latter heading; namely, that of rentals. 

A clear statement of the principle of rentals in relation to 
standardized accounting for retail stores will serve as a guide 
in its application. The amount charged to rentals should 
represent the amount paid as rent for the properties used in 
the conduct of the business, or the occupancy value of such 
properties; the latter on the theory that real estate profits are 
quite distinct from merchandising profits. Only by the inclu¬ 
sion in the expenses of a merchandising business of rentals on 
owned properties used in that business can the merchant 
determine the amount of profits arising out of merchandising 
operations. 

It is suggested that consideration be given to the following: 

1. The rental value of similar properties in the immediate 
vicinity. 

2. A proper return upon the apparent real estate value of 
the properties. 

In cases wherein there is a difference between the values 
disclosed by 1 and 2 as above, it would in most cases be proper 
to establish a figure compromising between the two, for the 
following reasons: 

May represent a temporary condition due to extreme busi¬ 
ness conditions or to unusual leasing conditions in the vicinity, 
and therefore would not in itself be suitable for a basis, or 
may disclose an amount at variance with the leasing con¬ 
ditions in the immediate vicinity. 

There are, generally speaking, three classes of operators, as 
follows: 

a. Those leasing all properties used. 


EXPENSES AND BUDGETS 


283 


b. Those owning all properties used. 

c. Those leasing part and owning part. 

Only classes b and c, as above, present any problem in 
determining the total rentals, and these only in the matter of 
the properties which are owned. 

In some extreme conditions the amount paid under a lease 
may fail to represent an amount even approximating the value 
of the premises. In such cases, if the variation be of sufficient 
amount to justify the procedure, a value may be arrived at as 
in the case of owned properties, and the amount of the excess 
credited to a special lease account appearing under “Other 
Income” on the Operating Statement. 

After deciding upon the amount to be charged to rentals for 
all properties used, the next process should be to determine the 
relative values of different parts of the properties. In this 
connection, consideration should be given to the following: 

a. Value of the Show Windows. 

b. Value of the Street Floor. 

c. Value of the Basements and Upper Floors. 

d. Relative values of most favorable locations. 

a. The floor space valuation of the show windows should be 
determined by its display value, but only in proportion to the 
location valuation placed on the entire street floor. 

The floor space rental established is charged to Rentals 02-1 
under the Window Department in the Publicity group. 

b. The value of the street floor is affected by the following 
considerations: 

1. Exposure or frontage. 

2. Number and locations of entrances. 

3. Number of stories. 

4. Layout of ground plan. 

5. Number and location of elevators. 

c. The values of basements and upper floors are more 
readily determinable after the windows and street floor have 
been assigned a value. Basements suitable for and used as 
merchandising space should be accorded a higher value than 
if used for non-selling purposes. Usually the floors decrease in 
value according to their height above the ground. In this 


284 THE MERCHANTS ’ MANUAL 

matter the adequacy of the elevator service is of prime con¬ 
sideration. 

Generally speaking, the assignment of values inside the 
store building is arbitrary, but a fair disposition of the 
matter may be made if due consideration be given to all of 
the factors. The particular departments carried bear on the 
subject, inasmuch as certain departments are more favorably 
located above the street floor. 

d. It is considered fair and proper in many well-regulated 
stores to recognize the variation in value as between certain 
parts of floors by charging some parts with a higher rental 
than other spaces not so favorably situated. These zones of 
higher value are usually easily located, and the matter of 
fixing the amount of variation should not be difficult. De¬ 
partments located on important aisles or in places where 
customers congregate, and spaces close to elevators, are 
examples. 

Argument is made that a store may be laid out so that all 
departments may be assigned locations equally desirable, pro¬ 
vided that in the plans proper consideration be given to the 
relation of departments to one another. It is held that in 
every store there is an ideal location for each department, and 
that no effort should be spared in determining and assigning 
these locations. The proponents of this theory claim that 
there should be no difference recognized in rental value of 
space used in selling, but that all area used in selling should 
be charged at the same rate. 

As rental is to be charged to selling, alteration, manufac¬ 
turing and window departments only, it is advisable to estab¬ 
lish a per square foot rental on the various locations and floors, 
excluding windows, as this has been previously determined, 
and after measuring the spaces occupied by the selling, altera¬ 
tion and manufacturing departments, the rental applicable to 
each can be readily computed. In establishing the per square 
foot rental charge it should be remembered that in eliminating 
the service departments, the rentals of the space occupied by 
the other class of departments must be increased. 

The application of the foregoing is more simple than may 
appear; in fact, the time necessary to complete all of the 


EXPENSES AND BUDGETS 


285 


calculations and measurements is found to be remarkably little 
even in stores of larger size. For purposes of correct com¬ 
parability the rental question is worthy of the particular atten¬ 
tion directed to it. 

For the guidance of those who have heretofore charged 
rentals upon some purely arbitrary basis, such as sales, atten¬ 
tion is called to the necessity under this plan of providing for 
the recording and adjustment of departmental changes when¬ 
ever they occur. 

Window Rental.—Expenses of window rental are charged 
to selling departments on the basis of arbitrary values of each 
window or case according to its display value. 

For example, suppose a store has five display windows, the 
best of which is arbitrarily valued at $5.00 per day, and two 
others, based upon their display value in comparison with the 
best window, at $4.00 and two at $2.00. Windows are used 
by selling departments during the entire month: 


Department 

Number 

Window 

Number 

Number of 
Days 

Rate Per 
Day 

Total 

4 

1 

10 

$5.00 

$50.00 

8 

1 

8 

5.00 

40.00 

3 

1 

4 

5.00 

20.00 

1 

1 

8 

5.00 

40.00 

7 

2 

12 

4.00 

48.00 

5 

2 

9 

4.00 

36.00 

1 

2 

9 

4.00 

36.00 

10 

3 

8 

4.00 

32.00 

9 

3 

22 

4.00 

88.00 

6 

4 

10 

2.00 

20.00 

4 

4 

12 

2.00 

24.00 

2 

4 

8 

2.00 

16.00 

8 

5 

20 

2.00 

40.00 

5 

5 

10 

2.00 

20.00 

Total. 


150 


$510.00 


The $510.00 represents the total arbitrary value charged to 
selling departments for window rental. Taken as 100 per 
cent it is accordingly distributed to selling departments as 


follows: 












286 


THE MERCHANTS’ MANUAL 


Department 

Number 

Arbitrary- 

Value 

Per Cent 

1 

$76.00 

14.90 

2 

16.00 

3.14 

3 

20 00 

3.92 

4 

74.00 

14.51 

5 

56.00 

10.98 

6 

20.00 

3.92 

7 

48.00 

9.41 

8 

80.00 

15.69 

9 

88.00 

17.26 

10 

32.00 

6.27 


$510.00 

100.00 


The percentages opposite each department designate the 
portion of time that they used the space, based upon the 
arbitrary display values of the windows to each other. The 
percentage having been determined, the next step is to dis¬ 
tribute the total expenses of the window department to the 
selling departments, and the following example is offered, 
considering that the total expense actually incurred amounted 
to $400.00: 


Department 

Number 

Per Cent 

Used 

Total 

1 

14.90 

$59.60 

2 

3.14 

12.56 

3 

3.92 

15.68 

4 

14.51 

58.04 

5 

10.98 

43.92 

6 

3.92 

15.68 

7 

9.41 

37.64 

8 

15.69 

62.76 

9 

17.26 

69.04 

10 

6.27 

25.08 


100.00 

$400.00 
















EXPENSES AND BUDGETS 


287 


No loss or profit will accrue to the business, as the actual 
expenses incurred will be charged to the selling departments. 

Alteration and Manufacturing Departments.—For the 
purposes of standardized accounting it is best that alteration 
and manufacturing departments operate on a cost basis with¬ 
out profit or loss to themselves. 

In cases where all work is done for one department, expenses 
are charged simply to cost of sales of that department. Where 
work is done for several departments, it is necessary to keep 
records covering the work done for each selling department. 
In the case of alterations, these records should be based upon 
the cost of each alteration made and the total amount appli¬ 
cable to each selling department computed in percentage, as its 
ratio in per cent bears to the grand total of all costs completed 
during the period by the alteration department. The total of 
the expenses of the alteration department can be transferred 
to the respective selling departments, apportioned on the basis 
of the percentages. Inventory of material and supplies should 
be taken at the end of each month or period if the actual 
expenses are desired. Charges made to customers for altera¬ 
tions will be included in selling department’s sales. 

The manufacturing departments should be operated on a 
cost-to-manufacture basis. In order to determine accurately 
the results of manufacturing it is necessary to devise a cost 
system so that all completed products manufactured can be 
transferred to the selling departments, either retail or jobbing, 
at cost; in transferring to retail selling departments, if the 
retail method is used, the transfers can be retailed the same 
as purchases made through outside sources. 

BUDGETING EXPENSES 

A budget is nothing more or less than a financial plan. Like 
all sound plans it is based on hindsight and on foresight. The 
two fundamental requirements for a budget are records cover¬ 
ing past experiences along similar lines and the future policy, 
which, in the case of a store, takes the form of planned sales. 

The chief objection which has been brought up against the 
budget is the constant expense of maintaining it. Coupled 
with this is the extreme flexibility required of it which makes 


288 


THE MERCHANTS’ MANUAL 


it undesirable to plan too far ahead. The first objection is 
merely technical, while the second is answered by the cus¬ 
tomary practice in retail stores of making budgets on a 
monthly basis. 

Budget practices differ widely, there being as yet no stand¬ 
ardized form of procedure. The whole subject is compara¬ 
tively new, but the fact that so many department stores have 
adopted the budget in one form or another is evidence of its 
coming importance in store management. The merchandise 
budget, the cash budget, the advertising budget, etc., are but 
the forerunners of the complete expense budget. 

The expense budget, as previously stated, rests on: 

1. Records of past expenditures over a period of years 
arranged under certain classifications. 

2. Merchandise budget, including expected sales, purchases, 
and inventories. Only by such knowledge will it be possible 
to estimate salaries and wages, advertising, supplies, etc. 

In all discussion of expense budgeting the important point 
is not the volume of expenses but the percentage of expenses 
to sales. Expenses do not increase or decrease relatively so 
fast as sales. A large portion of the expenses, rent, taxes, de¬ 
preciation, insurance, etc., remain the same in times of pros¬ 
perity and depression alike. That is, a great part, if not a 
majority, of the store’s expenses are not subject to executive 
control, and must be constantly scrutinized to see that they 
stand in the proper relation to sales. 

Preparation of Budget.—J. P. Friedman, in his address 
at the Controllers’ Congress, recommended the following 
method of estimating expenses: 

Each department head should be presented with a sheet prepared 
under direction of the controller showing expenses for the previous 
year by months, together with planned sales, purchases, and inven¬ 
tories for each of the months under consideration. This will apply 
both to selling and non-selling departments alike. 

Selling department heads should estimate direct expenses of their 
departments, while non-selling department heads should also estimate 
their expenses. These estimates should be forwarded for approval 
to a committee specially appointed for the purpose, for example, the 
controller and two others. 


EXPENSES AND BUDGETS 


289 


This committee is to review all estimates, consult with the various 
department heads if any questionable items appear; have authority 
to make any necessary changes; prorate the expenses of the non¬ 
selling departments to the selling departments; determine the net 
profit of each department by deducting from the sales the sum of 
the cost of merchandise, direct departmental expenses, and prorate 
the share of the indirect departmental expenses; summarize all the 
departments—the total being the budget for the entire store. 

Only two of the fourteen divisions of expense will be difficult to 
prepare—supplies and repairs. Complete control could only be had 
by a perpetual inventory for supplies and a cost system for the 
maintenance department. 

Mr. Friedman advocates applying this idea in a modified 
form. 

Physical inventories are usually taken of such supplies as 
packing material, stable, delivery equipment and stationery, 
semi-annually or annually, on the basis of which the con¬ 
sumption for the period under review is determined. On the 
basis of facts and experience and the planned sales, the con¬ 
sumption for the period for which the budget is being prepared 
can be estimated, and the amount of each month calculated 
on the basis of a percentage of the sales. Irrespective of pur¬ 
chases, the estimated figures can be used for expenses, the 
inventory increasing or decreasing by the difference between 
purchases and estimated consumption. 

Although some differences will develop at the end of the 
year between actual and planned figures, the variance should 
not be great. 

In regard to maintenance department labor, some sort of 
time record should be kept, perhaps by hours, all hours being 
extended at a uniform rate high enough to absorb all of the 
labor, supervision, and departmental overhead. Repair de¬ 
partment material would have to be estimated by the head 
of the maintenance department, and, although differences 
would occur at the end of the year, these will be of minor 
importance. 

Operation of Budget.—The control of expenses so that 
budget allotments will not be exceeded is essential if the 
budget plan is to be successful. This is particularly important 

19 


290 THE MERCHANTS’ MANUAL 

so far as the variable expenses, payroll, repairs, and supplies 
are concerned. 

The method of controlling payroll followed by Abraham and 
Straus is first to give the employment department a list show¬ 
ing the number of employees permitted in each department, 
excluding merchandise departments which are controlled by 
the assistant administration division chief and buyer or mer¬ 
chandise manager. Their records show daily the number 
present employed and should the number be greater at any 
time than the permitted number, the proper division chief is 
notified. All requisitions for help are checked against the 
record before filing. 

The payroll department reports each week to the statistics 
department the number of employees and amount of salaries 
paid for each department. This report is checked against the 
budget and discrepancies reported. Should a department 
manager desire to engage more employees than his budget 
allows, he must submit a request through the statistics depart¬ 
ment to his division chief. Until approved he cannot engage 
the employees. 

William Thomas, of Abraham and Straus, says: 

the main benefit of our expense budget is that we get the earnest, 
thoughtful cooperation of our executives to reduce expenses. Each 
executive knows his particular budget will be scrutinized very 
closely, first by his own division chief, and then by the budget com¬ 
mittee. This knowledge makes him avoid extravagance in any form, 
makes him think of ways and means to keep down expense and 
when once he signs his budget he makes a man-sized effort to keep 
within it. Our actual expense comes within a fraction of one per 
cent of the amount budgeted. 


CHAPTER XXII 


LEASED DEPARTMENTS 

Leasing of departments is practiced in both large and me¬ 
dium-sized stores, but is more usual in the latter class. Small 
stores either leave out entirely departments which they do 
not feel equal to undertake or else handle them in so small a 
way that any errors due to lack of merchandising ability in 
that particular department do not materially affect the busi¬ 
ness of the w T hole store. 

Of those departments which are rented to any extent, the 
following list shows those most subject to this treatment, 
listed in the order of their importance: 

1. Millinery. 

2. Hair goods—hairdressing and manicuring. 

3. Crockery and glassware. 

4. Carpets and linoleum. 

5. Furniture, or house furnishing in general. 

6. Optical goods. 

7. Pianos, musical instruments, sheet music. 

8. Wall paper. 

9. Shoes. 

10. Furs. 

11. Sewing machines. 

12. Dress patterns. 

13. Men’s clothing. 

14. Cleaning and dyeing. 

There are several other departments which are occasionally 
leased, such as fruits and vegetables, meats, cut flowers, photo¬ 
graphs, dental, toys, toilet preparations, soda fountains and 
specialties, and books. In rare cases cloak and suit depart¬ 
ments are found which are leased. 

Departments are never leased to manufacturers, but to syn¬ 
dicates formed for this purpose. The manufacturers may be 
behind these syndicates but their names do not appear. It is 

291 


292 


THE MERCHANTS’ MANUAL 


inadvisable to have a manufacturer interested due to his 
special interest in disposing of his own line. 

Reasons for Leasing.—One of the best examples of ex¬ 
ploitation of leased departments is that of the leasing of the 
various departments in the Wanamaker store in Philadelphia. 
At the expiration of the leases, each one which showed its 
ability to pay was taken over by the store. One of the prin¬ 
cipal reasons for leasing departments is the lack of the neces¬ 
sary detailed merchandising knowledge in the particular line. 

Departments are also leased after they have failed to pay 
the store. In some cases the lessees have the necessary buying 
power to enable the department to sell goods at the right price 
to insure success. It is naturally wisdom for a store to lease 
a department when it can obtain more profit than by running 
it itself, provided the leased department will be operated on 
a basis which will not be destructive to the store’s general 
good will. 

In seasonal goods where much capital is tied up for con¬ 
siderable periods, it may prove desirable to lease the depart¬ 
ment. 

In the case of hairdressing, manicuring, and special ser¬ 
vices, the articles are so at variance, the work to handle them 
so different, and the sales so small a part of the total volume 
of business that many stores feel it is not worth their time and 
energy to attempt self-operation of these departments. 

The advantages to the store are three: 

1. Completeness of line. Where a certain department is 
necessary to make the store more complete, it is an advantage 
to the store, even though it may not pay, in that it brings 
people into the store. 

2. Better management. Where the goods sold require spe¬ 
cialized knowledge of the particular line, the store may feel 
it desirable to lease the department to experts. 

3. Better price. The quantity buying power of a syndicate, 
concentrated on a particular line, often enables it to sell 
articles lower than the price at which the store itself could sell 
them. It becomes necessary, therefore, to lease the department 
in order to make a profit. 

The disadvantages to the store should not be overlooked. 


LEASED DEPARTMENTS 


293 


In the first place it is difficult for the store owner to fix the 
lease so that the lessee will have to conform absolutely to the 
code of conduct and general policy of the store. It is apparent 
that divergent and conflicting interests, inability to control 
possible radical actions such as cut-price sales, etc., might 
attract an entirely different class of trade and affect seriously 
the reputation of the store with a consequent loss of good will. 

In the second place a syndicate may overlook the exact 
needs of a particular locality, especially when its interests 
are scattered over the whole country. 

The advantage to the lessee lies in his procuring a stand in 
a more or less well-developed market, in the midst of a traffic 
made up of a definite type of purchasers. He has one great 
disadvantage, however, to cope with. There is great likeli¬ 
hood of the store taking over the department at the expiration 
of the lease, after having gained some of the necessary spe¬ 
cialized knowledge, and having had a demand for these 
particular goods created by the lessee’s efforts. 

Terms.—Percentages paid by concerns leasing departments 
will vary with the class of merchandise sold and also with 
the possible volume of business. There seems to be a tendency 
for considering 15 per cent where the lessee assumes all the 
selling, advertising, and buying expense. On this basis the 
lessee and the store are dividing the total expense between 
them. The ultimate return would depend upon the turnover 
that the lessee could secure. Of course, in some departments 
percentages may be less than 15 per cent, especially in ready- 
to-wear and low-priced shoes. There are a number of stores 
which have leased ready-to-wear departments on a basis of 
7V2 and 10 per cent, and similarly with shoe departments. 

Some concerns make a flat rate arrangement, some charge 
a certain percentage on sales, or a flat rate plus the percentage 
on sales, while others operate on a flat rate plus percentage 
of profits, or a straight profit basis. The entire proposition 
really resolves itself into a mutual understanding between the 
lessee and the store. 

Where concerns leasing departments pay only 7 or 8 per 
cent on their net sales, it is in many instances due to lack 
of knowledge by the owner of the store when the contract 


294 


THE MERCHANTS' MANUAL 


is signed. In all probability stores are losing money on this 
basis. Some store owners figure that by leasing their depart¬ 
ment they are getting some additional revenue and that it is 
just like found money. They do not stop to consider that 
if they operated this department themselves they would often 
show much better results. 

The best method of facing the problem is to consider it as 
though the department were being run by the store, and the 
rent prorated on this basis. In other words, if a ready-to- 
wear department were being run in the basement of a store, 
the operating expenses would probably be about 25 per cent. 
This would include all overhead expense, such as administra¬ 
tive and general, occupancy, publicity, buying, and selling 
expense. 

If the department is leased, the store is relieved of selling 
salaries, advertising space, buying salaries, and traveling 
expense. However, all the overhead of the administrative 
division, all the occupancy cost, the general expense of the 
publicity will be retained. In other words, from the usual 
expense can be deducted about: 

3 per cent for advertising. 

2 per cent for buying. 

6 per cent for selling and salaries. 

or a total of 11 per cent which may be deducted from 25 per 
cent. This leaves a balance of 14 per cent as the net overhead 
for the department. If 15 per cent is received from the lessee, 
the net profit is only 1 per cent, and in some cases even this 
may be doubtful. 

If this department were being run by the store, there would 
probably be a maintained mark-up of about 30 per cent, 
which should leave a net profit of 5 per cent after all interest 
on investment, mark-downs, and losses had been deducted. 

In leasing any section of the store it is essential to be sure 
of the integrity and character of the concern to whom the 
lease is given. In many ways it is like taking a partner into 
the business. 

The Lease.—It is difficult to take any contract for a leased 
department in its entirety and make it adaptable for the use 


LEASED DEPARTMENTS 


295 


of some other organization. When a store is about to lease 
a department, and a contract is to be drawn up, there are 
many clauses which have to be placed in it to fit each indi¬ 
vidual case. Certain points are, however, common to all 
leases: 

1 . Term of the Contract. While special circumstances may 
make it desirable to have a long-term contract, it is rarely 
in the interests of the store to lease a department for more 
than three years. 

2 . Equipment. The store generally agrees to furnish ordi¬ 
nary store fixtures, but if special equipment is necessary, the 
licensee should be required to furnish it at his own expense. 
The installation of this special equipment should be made 
conditional on the consent of the store. The store may reserve 
the right to change the location of the leased department if 
it is judged expedient. In such a case it is usual for the store 
to assume the expense of moving the fixtures. 

3. Merchandise Limitations. It is important to have a clear 
and definite understanding between the parties as to exactly 
what merchandise is to be sold in the leased department, and 
the question of whether the leased department has the right 
to the exclusive sale of these articles. For example, in the 
case of a hairdressing parlor which sold hair tonic as an acces¬ 
sory, the store would retain the right to sell these same tonics 
in its drug department. 

It is general for the licensee to covenant to carry at all 
times during the term of the agreement stock of a stated 
value, and to agree to make prices as low as in competing 
stores of the same grade. 

4. Heat and Light, etc. Heat, light, elevator service, hot 
and cold water, etc., are ordinarily furnished by the store. 

5. Assignment. The store should see to it that the contract 
should state that no assignment by the licensee should be 
made without special permission of the store in writing. 

6 . Hours of Business. The licensee is restricted in doing 
business to the business days and business hours of the store. 
If employees of the leased department must remain after hours, 
permission should be required to be obtained from the store 
superintendent. 


296 


THE MERCHANTS’ MANUAL 


7. Compliance with Other Store Rules. The licensee should 
be required to conform to all the general store rules. The 
store reserves the right to control and limit all displays and 
public exhibitions, or any other demonstrations whatsoever 
within the leased space. In fact, the store usually keeps the 
right of modifying them or discontinuing them absolutely. 

Disputes are usually settled by the store superintendent or 
other designated store official. 

8 . Insurance. The licensee must insure in his own name 
and at his own expense the merchandise and fixtures contained 
in his department. 

The licensee carries workmen’s compensation insurance on 
his employees, and also specifically exempts the store from 
any responsibility for acts of employees in the leased depart¬ 
ment. He also agrees to indemnify the store for any claim 
or action for damages arising in the conduct of the business. 

9. Right of Entry and Termination of Lease. The store 
or its representatives have the right of entry on the licensee’s 
premises for examination or repairs deemed necessary. 

If the licensee forfeits his rights by allowing the department 
to become vacant, or discontinues doing business, or fails to 
observe his covenants, or becomes insolvent, or makes a gen¬ 
eral assignment, the store may terminate the agreement. 

10 . Employees. Store atmosphere is one of the store’s main 
assets, and the personnel of the store is responsible for the 
major part of the atmosphere. It is important, therefore, that 
the store retain control of the hiring of employees for the 
leased department. It also pays their wages and exercises a 
general supervision over them. The licensee is, however, re¬ 
sponsible for their acts, and vouches for their honesty and 
their compliance with store rules and regulations. 

11 . Publicity. Advertising arrangements should be made 
very clear in the contract. The store should have supervision 
over the form and the media of advertising. The licensee, 
however, has a right to expect the same advertising rates as 
are obtained by the store. 

12 . Handling of Sales. The store covenants to collect money 
through its regular channels, just as is done in the general 


LEASED DEPARTMENTS 


297 


business. Reports are made weekly or monthly and balances 
settled. 

All business is done in the store’s name, but nevertheless the 
licensee is regarded as an independent contractor engaged in 
transacting his own business on the premises of the store. 

13. Deliveries. The store agrees to deliver articles sold in 
the leased department within its regular delivery range. 

14. Considerable difficulty is sometimes encountered over 
the question of credit for customers having charge accounts 
with the store. In general, the store agrees to carry all the 
accounts, subject to certain conditions if the account remains 
unpaid longer than a specified time. 

15. Sales Guarantee. It is customary for the licensee to 
guarantee gross sales equivalent to a stated amount. If busi¬ 
ness does not come up to expectations, the store should have 
the right to take a certain specified percentage of the receipts. 
If money received from the leased department during any 
period is not sufficient to pay disbursements made by the store, 
this money must be made up in cash by the licensee before a 
certain day of the following month. 

16. It is usual to insert a clause that if the store decides 
to sell the business or move to new quarters, in such a case it 
is optional with the store to terminate the lease or not. 









SECTION V 


MERCHANDISING 







CHAPTER XXIII 


MERCHANDISING EFFECTIVENESS 

The measure of merchandising effectiveness is the degree 
of adjustment between supply and demand. This can be. 
secured only by an accurate knowledge of the needs of the 
people composing the store’s market. This necessary informa¬ 
tion should be based on facts rather than on opinions. Tffe 
buyers must not choose what they themselves like, but what 
they know the majority of their customers will like. 

Market Contact.—To find out what the public wants can 
be done in any of three ways, and preferably in all three: 

1. By a survey of the market. 

2. By a tabulation of calls by customers for merchandise. 

3. By comparison shopping. 

The first method affords knowledge as to the actual and 
potential wants of the . community; the second method is a 
guide and constant check on the efficiency with which the 
store has anticipated and is keeping up with market needs; 
and the third method ascertains what competitors are doing 
to attract customers in the way of both merchandising effec¬ 
tiveness and service. 

The Market Survey.—Louis E. Kirstein, Vice President of 
William Filene’s Sons Company, says: 

The stream of profitable business is bounded on the one side by what 
we have on hand that the public does not want, and on the other 
side by what we have not that the public would buy if we had it. 

The first method of finding out what the public wants is to 
go direct to the public. 

Business volume is secured by a combination of wants and 
the ability to satisfy them. A thousand families might desire 
grand pianos while only ten could afford them. Hence all 

301 


302 


THE MERCHANTS ’ MANUAL 


market analyses must be conducted along the lines of ascer¬ 
taining the type of products desired and the percentage of 
people able to buy them. 

The Extension Division of the State University of Iowa, 
under the direction of Professor 0. E. Klingaman, conducted 
several surveys along the lines of scientific customer contact. 
It was recognized at the outset that people will shop for 
some things, and not for others, and therefore the survey 
showed two territories, one for convenience goods, and the 
other for shopping lines. The territory for convenience goods, 
groceries, notions, etc., is always smaller than that for shop¬ 
ping lines and is usually well defined geographically. The 
market for shopping lines depends on the merchandising effec¬ 
tiveness of the store, the transportation facilities, and the 
other factors brought out in discussing the ideal location for 
a store. 

A survey should show the population in the following age 
groups, as age and buying habits are closely associated: 


Under 5 years 


25 to 34 
35 to 44 
45 to 64 


5 to 9 
10 to 14 
15 to 19 
20 to 24 


65 years and over 


It should show also the income. Although more difficult 
to obtain, income is essential for any quantitative results. 
Knowing the income, the merchant can estimate approximately 
the expenditures for the various classes and for various types 
of goods. For example, he knows that the man with $1,000 
income will probably not spend anything for luxuries, while 
the man with $15,000 will probably spend a great deal and is, 
therefore, a logical prospect for a great many articles wholly 
beyond the reach of the $1,000 man. 

A survey must determine above all things the buying habits 
of the people. If a store knows why its customers buy, it can 
make it easier for them. For example, the Iowa survey found 
that customers were influenced in buying by the following 
factors, divided according to city and country purchasers, in 
the order of their importance (number one being the most 
important in each case): 


MERCHANDISING EFFECTIVENESS 


303 



City 

Country 

Window display. 

1 

3 

Newspaper advertisements. 

2 

4 

Shopping from store to store. 

3 

1 

Recommendations of friends. 

4 

2 

Recommendations of the merchant. 

5 

5 

Samples. 

6 

7 

National magazine advertisements. 

7 

10 

Demonstrations. 

8 

9 

Circulars through the mail. 

9 

8 

Mail-order catalogues. 

10 

6 

Billboards. 

11 

11 

Street car signs. 

12 

12 




It is interesting to note that while window display is the 
most important factor in influencing city purchasers, it is third 
on the list of country preferences. Similarly, newspaper adver¬ 
tising, which is second in the city, is fourth in the country. 

All merchants will find that ascertaining the wants of the 
public will be much more profitable than any temporary de¬ 
mand created by an expensive advertising campaign. In other 
w r ords, one of the principles of merchandising is to sell what 
the customer wants because it takes the least selling effort. 

The Want-slip System.—No better means has yet been 
devised for informing the buyers and merchandise managers 
of the public demand than the want slip. If the system is car¬ 
ried out consistently it is valuable not only as an index of 
the articles called for, but of the comparative volume of de¬ 
mand. The weakness of the system seems due mainly to three 
causes: 

1 . Some buyers look upon the want slips as a criticism of 
their buying efforts and discourage their use. 

2. Want slips are not made easily available. They should 
be given out with the salesbooks in the morning or placed 
where readily found in the department. 

3 . New salespeople are not sufficiently instructed in the 
use of the want slip. Careful training in the purpose and use 
of the slip, and practice in making it out, should be given by 




















304 


THE MERCHANTS’ MANUAL 


the educational department, or by the floor superintendent, if 
the store has no educational department. In any case, the 
floor superintendent should supplement the teaching by con¬ 
stant follow-up with individual members of his department. 

Want slips submitted by a large number of stores show 
wide variation in form from a slip with merely the word 
“Want” printed on it, to one including many points. The 
following list is a summary of the points from many slips: 

Date. 

Dept. No. 

Sales Person’s No. 

Article. 

Two or three lines left for description. 

Size Material Price 

Objections to stock on hand. 

Did you substitute? If so, what? 

Customer’s name, address, and telephone number. 

Buyer’s comments. 

Goods on order. When expected. 

Special order. 

Merchandise obtainable. 

In some stores the slip is made out in duplicate, one part 
being sent to the Merchandise Office and the other to the 
buyer. 

Figure 51 shows a form of want slip used in a large depart¬ 
ment store. The importance of recording the information is 
stressed throughout. The system reaches the salesperson, 
furthermore, personally responsible for the information by 
requiring her signature at the bottom of the slip. 

Figure 52 shows the method used by William Filene’s Sons 
Company in recording and tabulating want slips. If a closely 
similar article is carried, nothing is done. If there are a num¬ 
ber of calls for one article in a short time, the buyer is imme¬ 
diately notified. Articles receiving five or more calls are noted 
on a record form and sent to the buyer, who makes comments 
or remedies defects in stock. 

It is good practice to have departments shopped for items 
not carried and in this way it can be ascertained whether 
wants are reported. 


MERCHANDISING EFFECTIVENESS 305 

DAILY REPORT 
OF OUR CUSTOMERS’ WANTS 


Dept. 


Date- 

Clerk No. 


If we bend every effort to learn in detail, promptly and precisely 
what our customers want, we shall be equipping ourselves with the most 
vital information we can get. The whole success of any department 
depends on having what the people want, at the price they wish to pay. 
Those who come in contact with our customers have the best opportunity 
for learning these important facts and a very great responsibility rests on 
them to report these at once, by means of this slip. 

Every call for merchandise of any kind or size, not in stock, must be 
entered on this slip. Indicate plainly the size, style, color, quality or any 
other data so that the management and your department merchant may 
have the benefit of this information. 


CALLS TODAY AS FOLLOWS: 


I have entered every want today. 


Salesperson 


ROUTINE 

One of these reports will be filled out daily by each salesclerk and 
turned over at the close of the day to the section manager, who will see 
that a report is turned in by each clerk, and send the reports at once to the 
statistical division. 

In this statistical division at 9:00 a. m. the following morning the 
merchandise called for by customers will be listed for each department in 
quadruplicate on the daily summary of customers’ wants. 

Fig. 51.—Form of want slip. 


20 















306 


THE MERCHANTS’ MANUAL 


In another store, the wants for each department are listed 
every day under the buyer’s name. A long sheet is used, the 
wants each day being entered until the sheet is filled. The 
merchandise manager goes over this list daily with the buyer, 
marking off items as they are filled or rejected. 

Another store collects want slips each morning, sorts them, 
and lists according to department. The buyer makes a report 
on each item called for, whether it is on order, whether he 
thinks it practical to have in stock, and whether it can be 


Department^ TABULATED MERCHANDISE CALLS For Week Ending 4 - 


Material 

Style Tendency 

Color 



& 

'if 


7- 



ff 

$ 



Miscellaneous 

Total 

CALF 


Btrtyn 



1 ! 










riu 1 

75k 









1 




// ■ * 






, 

II 






1 



II % 


uiLU 






( 







tHJ III • 

1 * 



Fig. 52.—Method used for recording want slips. 


( System) 


found in another section of the store. Merchandise managers 
keep books with a sheet for each department on which all 
wants for that department for a week or a month are recorded. 
By looking in these books it is possible to tell how spring suits 
of different materials are beginning to be sought; how one 
department found and filled a shortage in a certain size and 
brand of hosiery; while another foresaw the return of a style 
that had not been “good” for several years and built up its 
stock accordingly. 

A want-slip system requires the following: 



































































MERCHANDISING EFFECTIVENESS 


307 


1 . Merchandise managers must be thoroughly in sympathy 
with the plan and must work with buyers until they cooperate 
willingly. 

2 . Merchandise managers must follow up wants closely with 
buyers. 

3. The want slip must be as simple as possible for the ac¬ 
complishment of the purpose. 

4. Each salesperson must be required to hand in a slip daily. 
“No Wants” may be written if there is nothing to report. 

5. A daily record and monthly summary of number of 
wants handed in by each salesperson, filed in superintendent’s 
office or educational department, and followed up. 

6. Personal commendation when deserved. 

Comparison Shopping.—It seems generally decided that 

an efficient centralized shopping department is essential for 
merchandising effectiveness. The object is to keep the store 
informed of all activities in competing stores. Advertisements 
are scanned daily for notices of special sales, prices, qualities, 
etc. The state of business is ascertained in each competing 
store. Window displays are carefully watched. Interior ar¬ 
rangements and layout are scrutinized. 

The importance of the comparison department varies with 
the policy of the individual store. In some cases it is respon¬ 
sible directly to the operating head of the store while in other 
cases the head shopper reports to the merchandise manager. 

Figure 53 shows a typical merchandise shopper’s report on 
an article in a competing store. Large sums of money are 
frequently required by shoppers for such purchases. Fre¬ 
quently articles bought by shoppers are sent to manufacturers 
to be copied. Articles may also be put in stock and sold. 

Figure 54 shows a form used by service shoppers. While 
such work is sometimes conducted separately, it is best per¬ 
formed as a by-product of the merchandise shopping. 

The basis of comparison both of merchandise and service is 
from the viewpoint of the customer. It is desired to find out 
the factors in competing stores which would induce the cus¬ 
tomer to go there. As prices and merchandise are so well 
standardized, the service often may be the decisive drawing 
factor. 


308 


THE MERCHANTS’ MANUAL 


One large eastern store shops from four angles: 

1 . Intrinsic Value. It is the fundamental principle of the 
business not to be undersold. Consequently a great deal of 
time is spent by the comparison office shopping for the in¬ 
trinsic value of their merchandise as compared with competi¬ 
tors’, the purpose being to insure that they are giving, dollar 
for dollar, just as much quality and quantity as competitors. 

2 . Price. Price competition is recognized by the public more 
easily than intrinsic value. A customer is impressed more by 


Merchandise Shopper’s List 


To 


Article 


Remarks: 

Our Comparison: 

If Competitive Merchandise was advertised, was ours reduced for the day? 


Shopper No. 


Fig. 53—Merchandise shopper’s report on article compared with competing 

store. 

the fact th?t one of their competitors is featuring a line of 
suits at $25, as compared with their cheapest at $35, than by 
the fact that certain details of workmanship make the $35 
suit a better value than the competitor’s at $25. Therefore, 
they believe it is very important to carry merchandise at as 
least as low a price as their chief competitors. 

3. Selection. Unless the store offers as large a selection at a 
price as its competitors, it will not be able to suit so large a 
proportion of the buying public, at this price, as a store with 
a wider selection, and consequently will lose business. There- 


Date Shopped 


, Dept. 


Competitive Table, Booth Advertised Time. 

Store or Dept. or Not. 


Busy Regular 

or Not. or Special 





















MERCHANDISING EFFECTIVENESS 


309 


SERVICE SHOPPER’S REPORT 


Rate. Day. Hour. Salesperson’s Number 


Did salesperson have book and pencil 
ready, without searching for them? 


Did she call back to you the amount of 
money you gave her? 


Did she count out your change 
to you? 


Did she show you your name and address 
on sales check or call it back to you? 


If package was delivered to you un¬ 
wrapped, what precaution did she take? 


How long did you wait for your 
package? 


If delayed, due to what? 



Please rate, by check in the proper column, the qualities of the salesperson: 



Good 

Fair 

Poor 

Appearance 




Approach 


•i 

Manner 




Knowledge of Mdse. 




Selection of Mdse, shown 




Substitution | 



Suggestive selling 



If you visited the department again, would you want 
this clerk to wait on you? 

REMARKS: 

Shopper No, 


Fig. 54.—Service shopper’s report on salespersons of competing store. 
























































310 


THE MERCHANTS’ MANUAL 


fore, it is essential to carry as complete a stock at a price as 
is to be found in competitors’ stores. 

4. Style. It is a policy of this store to be the first to feature 
new style and novelty merchandise. Considerable pressure is 
exerted in the comparison office to see that this policy is lived 
up to. 

For service shopping this store uses different types of women 
so that different points of view may be obtained. Service 
shoppers are changed every six or eight weeks so that they 
may not become known. 

The following rating schedule is used by service shoppers: 


10 points.. . 

Appearance.. 

Physical appearance, neatness and appro¬ 
priateness of dress. 

10 points. .. 

Approach.... 

Courtesy and alertness of approach. 

15 points.. . 

Interest. 

In job, customer, merchandise. 

15 points. . . 

Knowledge... 

Location of stock, technical points about 
merchandise, quality of material, color, 
durability, etc. 

50 points... 

Force. 

Salesmanship, ability to create desire to buy. 








CHAPTER XXIV 


MERCHANDISE CONTROL 

The successful store today is the one which has adopted 
and maintains standards of procedure in buying and selling. 
Such standards can be obtained only through coordination of 
effort and the elimination of energy wasted through inefficient 
methods. The operating supervision must emanate from a 
central source according to a carefully prearranged schedule, 
called the merchandising plan. 

Hundreds of stores leave the merchandising of various 
departments to the individual buyer, exercising little or no 
supervision over his or her operations as long as the figures 
on the profit side of the ledger are favorable. Others have 
merchandise managers in name only. When a case of mis- 
judgment occurs and the department shows a loss, either a 
new buyer is secured, or one of the store heads gives active 
attention to the department. 

Merchandising control means the definite outlining of a 
merchandise plan before the beginning of the season. This 
plan provides for conservative stock levels, speeds up turn¬ 
over, and keeps merchandise constantly new and fresh. The 
initiative of the buyer is not restricted inflexibly; it is merely 
directed along the lines on which the whole store is working. 

The criticism that merchandising is largely post-mortem 
and not preventive, that it hampers the proper functioning 
of a department buyer and restricts his ingenuity and ability 
to the detriment of department profits, may sometimes be 
merited. But where a conservative merchandise plan is in 
operation along prudent lines, it will result in increased sales 
with larger profit. Those stores which in recent years have 
been most consistently successful have mainly exercised mer¬ 
chandise control. 

The merchandise plan may be divided into analysis, plan¬ 
ning and control. 


311 


312 


THE MERCHANTS’ MANUAL 


Merchandise Analysis.—The first essential in the forma¬ 
tion of the merchandising plan is to classify the various 
merchandise groups and physically to separate them in their 
accounting so that an individual record may be kept of pur¬ 
chases, sales, stocks, mark-ups and mark-downs. This is 
specialization and will facilitate the making of clearer 
analyses. 


Report No. 50 A 



19 

19 

19 

, 19 

19 


Retail stock 1st period 

Per cent mark-up 

Retail purchases 

Per cent mark-up 
Mark-downs and stock diff. 

Per cent to sales 

Retail stock end period 

Per cent mark-up 

Sales 

Per cent increase 

Gross profit 

Per cent to sales 

Expense 

Per cent to sales 

Merchandise profit or loss 

Per cent to sales 

Stocktum 








Fig. 55.—Periodical merchandise report. 


Table IV shows the standard method of merchandise classi¬ 
fication adopted by the Controllers’ Congress of the National 
Retail Dry Goods Association. From the basic group of eight 
departments for the small dry goods store, it is expanded to 
the fourth group of 122 departments for the large store. 
Standardized merchandise classification is a necessary pre¬ 
liminary to any comparison of departmental operations. 

A periodical merchandise report gives comparisons with 













MERCHANDISE CONTROL 


313 


Table IV.—Classification of Merchandise 


Group I 

8 Departments 

Group II 

34 Departments 

Group III 

58 Departments 

Group IV 

122 Departments 

Dry Goods 

Silks 

Silks 

Velvets 

Colored Silks 

Black silks 

Velvets 

Dress Goods 

Woolen Dress Goods 

Wash Dress Goods 

Black Dress Goods 
Colored Dress Goods 
Patterns 

Linings 

White Wash Goods 
Colored Wash Goods 

Linens and Domes¬ 
tics 

Linens 

Domestics 

Linens 

Cottons and Sheetings 
Blankets and Com¬ 
forts 

Laces, Trimmings 
and Embroideries 

Laces, Trimmings 
and Embroideries 

Laces 

Trimmings 

Embroideries 

Neckwear and Veil¬ 
ings 

Neckwear and Veil¬ 
ings 

Neckwear 

Veilings 

Ribbons 

Ribbons 

Ribbons 

Small Wares 

Notions 

Notions 

Notions 

Toilet Articles 
Handkerchiefs 

Toilet Articles and 
Drugs 

Handkerchiefs 

Toilet Articles 

Ivory, Drugs 
Handkerchiefs 

Silverware and 
Jewelry 

Silverware and 
Jewelry 

Silverware 

Jewelry 

Leather 

Leather Goods 
Umbrellas, Parasols 
Canes 

Leather Goods 
Umbrellas, Parasols 
Canes 

Art Needlework and 
Art Goods 

Art Needlework and 
Art Goods 

Art Needlework 

Art Goods 

Men’s and Boys’ 
Wear 

Men’s Clothing 

Men’s Clothing 

Men’s Clothing 

Men’s Furnishings 

Men’s Furnishings 

Men’s Hats and Caps 

Robes and Smoking 
Jackets 

Men’s Furnishings 
Men’s Hats and Caps 

Boys’ Wear 

Boys’ Clothing 

Boys’ Furnishings 

Boys’ Clothing 

Boys’ Furnishings 
Boys’ Hats and Caps 





























314 


THE MERCHANTS’ MANUAL 


Table IV. —Classification of Merchandise 


Group I 

8 Departments 

Group II 

34 Departments 

Group III 

58 Departments 

Group IV 

122 Departments 


Coats, Suits and 
Skirts 

Coats 

Suits 

Skirts 

Women’s Coats 

Do Suits 

Do Skirts 

Do Dresses 

Do Stouts 


Dresses 

Dresses 

Misses’ Coats 

Do Suits 

Do Skirts 

Do Dresses 

Women’s and 
Misses’ 

Ready-to-wear 


Misses’ Wear 


Furs 

Furs 

Fur Storage 

Furs 

Fur Storage 


Juniors’ and Girls’ 

Juniors’ and Girls’ 

Juniors’ and Girls’: 
Coats 

Suits 

Skirts 

Dresses 


Waists, Sweaters and 
Knit Goods 

Waists and Blouses 
Sweaters and Knit 
Goods 

Waists and Blouses 
Sweaters and Knit 
Goods 

Sports Wear 


Millinery 

Millinery 

Millinery 


Gloves 

Gloves 

Ladies’ Gloves 
Children’s Gloves 

Women’s 

Ready-to-wear 

Accessories 

Corsets, Hosiery, 

Knit Underwear, 
Muslin Underwear, 
and Infants’ Wear 

Corsets and Brassieres 
Hosiery 

Knit Underwear 
Muslin Underwear 

Infants’ Wear 

Corsets and Brassieres 
Ladies’ Hosiery 
Children’s Hosiery 
Knit Underwear 
Muslin Underwear 
Bathing Suits 

Infants’ Wear 


Petticoats, Negligees 
and House Dresses 

Petticoats, Negligees 
and House Dresses 

Petticoats 

Negligees 

Aprons and House 
Dresses 


































MERCHANDISE CONTROL 


315 


Table IV.—Classification of Merchandise 


Group I 

8 Departments 

Group II 

34 Departments 

Group III 

58 Departments 

Group IV 

122 Departments 


Women’s and Chil¬ 
dren’s Shoes 

Women’s Shoes 
Children’s Shoes 

Women’s Shoes 
Children’s Shoes 

Shoes 

Men’s and Boys’ 
Shoes 

Men’s and Boys’ 
Shoes 

Men’s Shoes 

Boys’ Shoes 




Shoe Shine 

Repairs 


Furniture, Beds, etc. 

Furniture, Beds, etc. 

Furniture 

Beds, Mattresses and 
Springs 

• 

Floor Coverings 

Rugs 

Carpets, Linoleums 
and Mattings 

Oriental Rugs 
Domestic Rugs 
Carpets 

Linoleums and Mat¬ 
tings 

Home Furnishings 

Draperies and Lamps 

Draperies and Lamps 

Draperies 

Lamps 

Shades 

Art Wares 

Decorating 

Wall Paper 


China and Glassware 

China and Glassware 

China and Glassware 


House Furnishings 

House Furnishings 

House Furnishings 
Pictures and Picture 
Framing 

Sewing Machines 
Electrical Equipment 

Miscellaneous 

Toys and Luggage 

Toys and Sporting 
Goods 

Luggage 

Toys 

Sporting Goods 
Camera Supplies 
Luggage 

Automobile Supplies 


Books and Stationery 

Books and Stationery 

Books and Magazines 
Stationery 



















316 


THE MERCHANTS' MANUAL 


Table IV. —Classification of Merchandise 


Group I 
8 Departments 


Group II 
34 Departments 


Group III 
58 Departments 


Group IV 
122 Departments 


Talking Machines 


Talking 

etc. 


Machines, 


Talking Machines 
Records and Rolls 
Pianos and Piano 
Players 
Sheet Music 


Miscellaneous 


Washing Machines 
Vacuum Cleaners 
Optician and Optical 
Goods 


Candy 


Candy 

Soda Fountain 


Restaurant 


Restaurant 


Ready-to-wear 


Coats 

Suits 

Skirts 

Dresses 

Waists 


Ready-to-wear 

Accessories 


Corsets 

Hosiery 

Knit Underwear 


Basement Store 



Muslin Underwear 


Children’s 

Millinery 

Millinery 


Small Wares 

Piece Goods 

Shoes 

Shoes 


Draperies 
























MERCHANDISE CONTROL 


317 


corresponding periods of preceding years and shows purchases, 
sales, stocks, orders, profits, expenses, turnover, etc. See Fig. 
55. This report is made as often as may be deemed necessary 
by the merchandise department from departmental figures. 
Copies are given to executives and buyers. From such a report 
many facts are revealed which will form a basis of control 
over future activities. Such a report gives a picture of what 
has actually happened in a department. 

In many ready-to-wear sections and other departments 
carrying large items of merchandise, price sales records are 
kept. These show the number of pieces sold at each price 
according to stock divisions. These records are summarized 
at the end of the month and season, compared with previous 
seasons’ records, and used as one of the bases for future plans. 
See Fig. 56. 

A perpetual book inventory record is also kept in some 
departments, showing by merchandise divisions, manufac¬ 
turers’ and style numbers, purchases, sales, and unsold stock. 
This serves a useful purpose for re-orders of quick-selling 
items, for action on slow-selling items, for an actual inventory 
check, and for a record of profitableness to the store of any 
particular manufacturer’s line. 

Merchandise Planning.—The object of planning is to have 
the right goods at the right time at the right prices—a com¬ 
plete stock at as low prices as are warranted by competition, 
the quality of the merchandise, and the service rendered. 

All plans should be made in writing prior to the start of 
the year or season. They should be made with the coopera¬ 
tion of the merchandise managers and buyers and should pre¬ 
cede all purchases. Plans should combine good judgment with 
analysis and vision of undeveloped possibilities. In one store 
plans are made out three months in advance so that the 
controller may have ample notice of financial requirements. 
He decides whether the investment in stock is right for the 
amount of business to be done, and whether expense is in 
proportion to the rest of the planning. 

Plans for a future period should allow for an increase over 
the entire period, distributed by months. The same percentage 
of increase may not necessarily be allowed for every month. 


318 


THE MERCHANTS' MANUAL 



Fig. 56.—Price sales records 
























































































MERCHANDISE CONTROL 


319 


One excellently managed store finds it advisable to allow 10 
per cent increase each year to provide for adequate payroll, 
upkeep and other store standards. The stock must at all 
times be large enough for a model stock but small enough to 
insure as frequent a turn as possible. 

Plans for mark-down may be distributed by months, allow¬ 
ing a greater percentage for clearance periods. Retail losses 
may be included in the mark-down figure. 

Figure 57 shows the six-months’ planning form of a large 
specialty store. The merchandise manager of the store says 
in regard to the planning policy: 

In setting the figures we take into account the increase which the 
department has been scoring during the half year in which the plans 
are being made as affording some clue to what may reasonably be 
looked forward to in the months to come. In some cases if we feel 
that a department has not scored a reasonable business we may 
arbitrarily say that we ought to do more in that particular line of 
merchandise. Any contemplated change in space, etc., is taken into 
account. 

The following general factors must be borne in mind in making 
out plans: 

a. Last year’s experience. 

b. Recent years’ experience. 

c. Experience of preceding months this year. 

d. Market prospects. 

e. Upward or downward trend of prices. 

f. Change in space occupied by department. 

g. Further specialization. 

h. Position of holidays in period. 

Departmental figures are prepared for the subdivisions of a de¬ 
partment, where such exist, rather than for the department as a 
whole. For instance, the figures will be made out for lisle hosiery, 
silk hosiery and children’s hosiery, rather than for the hosiery 
department. 

The mark-up, sales, mark-downs and stock figures are guided by 
past figures. The greatest allowance will be made for mark-downs 
in the month in which previous experience has shown mark-downs 
to be heaviest, and the ratio to sales will be based upon past experi¬ 
ence, although, of course, we may plan upon improvement. 

Final plans for the department are made on Fig. 58. The months 
are designated according to whether the plan is for the first or second 


320 


THE MERCHANTS’ MANUAL 


SA15 

Period March 


to August 1922 Inc. Dept.SILK HOSIERY No. CC 


MONTH 

Sept. 

Oct. 

Nov. 

Dec. 

Jan. 

Feb. 

Mar. 

Total 

Mar. 

Apr. 

May 

June 

July 

Aug. 

Sept. 

Ret. Stock 1st of Month 









Last 

196,883 








PLAN 

150,000 








% Mark-up on Stock 

34.3 








Last 

33.00 








PLAN 









Retail Purchases 









Last 

30,022 








PLAN 

30,400 








Initial Mark-up 









Last 

29.6 








PLAN 

30 








Sales 









Last 

28,120 








PLAN 

30,000 








Mark-downs 









Last 

1,108 








PLAN 

400 








Expense 

Last 

6,989 








%_ 

24.9 








PLAN 

9,353 








% 

31.2 









To buyer: Please be sure to show plan first of month, stock for seven months. 


PROPOSED RESOURCES 
(Order of Importance) 

NAME TERMS 

Emery Beers and Co. 8—10 

Marshall Field and Co. 

Etc. 


FULL LINE PRICES 




Below 

$1.65 

Cheapest Full 

2.00 

Between 

2.25 

Best Selling 

2.50 

Between 

2.65 

Highest Full Line 

3.00 

Above 

3.50—8.50 


Fig. 57. —Six-months’ planning form. 

























































































































MERCHANDISE CONTROL 


321 


Silk Hosiery Department Months March to August 1922 Inc. 

_ March _ April _ May 



COST 

RETAIL 

Per 

Cent 

COST 

RETAIL 

Per 

Cent 

COST 

RETAIL 

Per 

Cent 

Stock 1st Period. .. 
Purchases. 

100,500 

150,000 

33.0 

100,500 

150,000 

33.0 

97,150 

145,000 

33 

21,280 

30,400 

30 

26,180 

37,400 

30 

30,450 

43,500 

30 

Sales. 

21,280 

30,000 

26.5 

29,530 

42,000 

21.7 

30,450 

43,000 

19 

Mark-downs. 


400 

1.3 


400 

1.0 


500 

1.2 

Stock end period... 

Gross profit. 

100,500 

150,000 

33.0 

97,150 

145,000 

33 

97,150 

145,000 

33 


8,720 

29.1 


12,470 

29.7 


12,550 

29.2 

Expense. 


9,353 

31.2 


10,888 

25.9 


11,804 

27.5 

Mdse. Profit... 

-633 

-2.1 

1,582 

3.8 

746 

1.7 










Stock 1st Period. . 
Purchases. 

Sales. 

Mark-downs. 

Stock end period... 

Gross profit. 

COST 

June 

RETAIL 

Per 

Cent 

COST 

July 

RETAIL 

Per 

Cent 

COST 

August 

RETAIL 

Per 

Cent 














































Expense. 










Mdse Profit... 










• 






Stock 1st Period. . . 
Purchases. 

Tl 

COST 

ird Quartt 

RETAIL 

Per 

Cent 

Foi 

COST 

rth Quartt 

RETAIL 

sr 

Per 

Cent 

Secc 

COST 

nd Half 

RETAIL 

Year 

Per 

Cent 










Sales. 










Mark-downs. 










Stock end period.. 

Gross profit. 



















Expense. 










Mdse. Profit... 
















Fig. 58.—Merchandise planning form. 


21 



























































































































322 


THE MERCHANTS ’ MANUAL 


half of the year, the bottom spaces being used for the quarter and 
half-year summaries as indicated. 

Having determined our plans the figure for the volume of pur¬ 
chases becomes the buyer’s guide for his market purchasing for the 
six months to come. 

On the fifteenth day of the month the Open-to-Buy figure is 
determined in the following manner: stock on hand is reported every 
other day by the Controller’s division. From this figure is sub¬ 
tracted the difference between the volume of sales already secured 
and the volume planned for the month. If the stock on hand minus 
anticipated sales for the balance of the month is less than the stock 
allowed for the end of the month, the department is open to buy. 
If the stock on hand minus anticipated sales is more than the stock 
allowed for the end of the month, the department cannot buy with¬ 
out special arrangements. 

The open-to-buy figure may be amended by increase or decrease 
if the sales during the first ten days of a month make it obvious that 
the planned sales for the month are either too high or too low; like¬ 
wise if an increase of 20 per cent was planned for, and a department 
for two or three months either makes no increase or an increase of 
40 per cent, the planned sales are revised, not only for the current 
month, but for the months ahead. 

Model Stock Plans.—A model stock plan should be made 
for each department subject to modification by conditions of 
trade, market, etc. This plan should be based on the buyer’s 
judgment as to the number of pieces required to make a 
complete model stock, always'keeping in mind his customers’ 
needs. There is a fundamental minimum requirement for 
completeness of assortment. This is basic. Over and above 
this basic requirement is the excess, due to the increased needs 
of the people and the store. Past performance is an indicator. 
Market tendencies govern prices. In making a model plan 
by prices and pieces under each merchandise subclassification 
and establishing a minimum base the guide should be: 

1. Such increases as past performances indicate are neces¬ 
sary. 

2. Market conditions. 

3. Vision of increased needs of public and store. 

Model stock plans should cover periods of calendar months 
except in those departments where neither the amount nor 


MERCHANDISE CONTROL 


323 


the character of the stock investment changes greatly during 
a season, such as in staple departments. 


r 




REVISED 

MERCHANDISE PLAN 


Section 


J2L 


Perlod /**. 'f*Q Tn /*& /7Z0 

9WIf' O V D __ 


RETAIL STOCK: 


RETAIL 


On Hand at 

Beginning of Period_ to 0. OOO _ 

Deeired at 

End of Period _ TO.OOP _ 

Stock Should Turn 


Maximum Stock. -fS.QQQ 

Minimum Stock. JA f.Q Q Q . 
3 /z TirriftH within this period 


Initial Mark-Up Required 3 J <rJo Mark-DownB Allowed / 0. 3 uln Ormw Earning Expected CJQi S • 


MONTH 

Feb. 

Mar. 

April 

Mey 

Jana 

.July 


Turn- 

over 

2.96 

3.22 

Aug. 

Sept 

Oct 

Nov. 

Dec. 

Jan. 


Retail Stock lit Month 

LutYut_ 

M./37 

5/536 

57663 


6/no 

66532 

Average Stock 

57 22 ¥ 


(>0,000 

75 ooo 

?7.0oo 

6 3 OOO 


+7 000 

7/ OOo 

Result 

















In. 

eieofw 

To 

Saks 

V7f 


Retail Purchases: 

3/, 3/7 

+9579 

+/.7S0 

27757 

3/362 

30. 707 

Totula 

2 09.509 

Pi. n 

6$,ooo 

Sgsoo 

If, OOP 

36 ooo 

20.000 

32,500 

2 35.000 


















Salas 

20.62,9 

+1732 

3^/02 

22,/*5 

2 4207 

Jg-990 

/ 6 9+25 


2ft, ooo 

57ooo 

5f.ooo ' 

33ooo 

35:ooo 

76.000 

22 ft OOO 


















Mark-Downs: 

Last Y*** 

s r 3+r 

flJ 

/.03f 

+2f 

f¥3 

PA**' 

tzr 

Plun 

6,ooo 

1500 

/.OOO 

//nnr. 

/cmr 

/qsoo 

2 /, aoo 


















Remarks: sdsfcrzA a ^ 


Signed. 


Approved. 




Annrnve i 

yf tcawl ILAca 


Reviewed. 


Fig. 59.—Revised merchandise plan. 


A model stock summary plan is compiled from the indi¬ 
vidual departmental model stock plans. This is a financial 
summary of the stocks planned for the various departments. 

From the model stock plans a six-months’ merchandise or 
financial plan (see Fig. 59) may be made by a series of 






















































324 


THE MERCHANTS’ MANUAL 


summaries of the model stocks and completed by the stand¬ 
ardizing of the department’s initial mark-up, mark-down, 
and required net mark-up. 

When these plans have been completed, the next step is to 
see that they are properly carried out. Provisions should 
be made for their checking, which is commonly done either 
through the merchandise office or by the buyer and his assist¬ 
ants by entering in spaces provided on the forms actual 
purchases, sales, stocks, and mark-downs each month. 

Merchandise Control.—There are five principal points of 
contact through which a merchandise control system may be 
effected, viz.: 

a. Planning control. 

b. Purchase control. 

c. Sales control. 

d. Stock control. 

e. Profit control. 

Planning Control.—As already indicated, plans are con¬ 
trolled through joint action of the merchandise office and the 
buyers. 

Purchase Control.—The purchase plan should be made 
from the Open-to-Buy analysis which takes into account the 
stock on hand and unfilled orders. It also shows planned 
sales and stock planned at end of season, and is usually made 
up for the quantities to be filled in at each price in each sub¬ 
division of the merchandise. See Fig. 59. 

Table V shows a form which has been used successfully by 
a number of retail stores. On the purchase control record in 
the column where it says “balance” is credited the purchase 
allotment, which in this case is $16,770 for a period of 6 
months. Each order is charged against this amount, giving 
the order number and amount, deducting it to show the balance 
and then the amount of each order is entered in the “un¬ 
shipped order column” and the invoices are credited as they 
come in. This shows at all times the amount of unshipped 
orders. 

On the right-hand side of the record the allotment by 
months should be carried, if desired. 

When once the purchasing limit has been set it is not 


Table V.—Purchase-control Record 


MERCHANDISE CONTROL 


325 


CM 

CM 

05 


G 

G 
O 
c q 
G 
05 

QQ 


CM 

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326 


THE MERCHANTS’ MANUAL 


ordinarily the custom of the store to interfere with the pur¬ 
chases of the department buyer. Individual policies vary. In 
one store of moderate size a buying limit is set strictly in 
accordance with sales of the corresponding season of the 
previous year. Of this amount set aside as a limit from 60 
to 80 per cent is appropriated for the purchase of advance 


Buying Limit for Dept. No. 28 

FALL 1920 


Mark-up Expected 40 per cent 1919 Actual Mark-up 34 H 

Turn Made 3.2 1919 Average Stock $ 35,000 

Total Sales $172,000 

Fall 1919 

Purchases 6/30 to 1/1. $52,600 

Sales 6/30 to 1/1. $90,900 


Your buying limit placed for Fall 1920 is $50,000 

60 Per cent Advanced $30,000 

Per Cent Figured 40 Placed $ 4,500 

Open to buy $25,500 


Sales were made last year as follows: 


July 

Per Cent 
14 

August 

15 

September 

15 

October 

16 

November 

20 

December 

19 


And every effort should be made to have shipments arrive accordingly 


Fig. 60.—Report made to buyers. 

merchandise prior to the actual opening of the season. After 
the opening of the season the buyer is credited weekly with 
the wholesale cost of his increase in planned sales as an ad¬ 
ditional buying credit, which additional credit is added to the 
balance of his limit as shown at that date. Decreases in sales 
are handled in the reverse manner. 








MERCHANDISE CONTROL 


327 


At the end of each week the buyers receive a slip (see Fig. 
60) showing the sales, purchases, stock on hand and back 
orders, as well as the corresponding figures for the year 
previous. 

A large store on the Pacific Coast has a very interesting 
purchase-control system, which is described by the head of the 
firm as follows: 

Purchasing limits are usually arranged for a 6-months’ period, 
and are also based on the class of merchandise carried in the different 
departments. In some departments it is necessary to anticipate 
further than in others. In staple departments like knit underwear, 
hosiery, china, and shoes, it is possible to anticipate from 6 to 8 
months in advance, while in such departments as millinery and 
wearing apparel, there would be no anticipated purchases, as this 
merchandise would be planned from “hand to mouth.” 

All orders placed are confirmed either by our New York office, 
when buyers are in the eastern markets, or by the merchandise 
manager when the purchases are made at home. All local orders 
amounting to more than $100 are confirmed by the merchandise 
manager. Orders amounting to less than $100 may be placed with¬ 
out having the orders confirmed. However, we request written 
copies to be made of all orders, regardless of how large or small the 
amount may be, and these orders should be on file in our receiving 
room before the invoices for the merchandise are received. 

Each department manager is furnished once a month with a 
purchasing limit sheet showing the balance, or the amount, his de¬ 
partment may be over-bought for the 6-months’ period. On our 
local limits a sheet is furnished every three months showing the 
amount reserved, and also the amount of merchandise booked up to 
that particular time for delivery during the period which the limits 
are intended for. 

Figure 61 A shows the local purchasing limit sheet. Figure 
61 B illustrates the eastern purchasing sheet. A record con¬ 
trol card, Figure 61 C, shows individual orders and allotments 
for each department monthly. 

Sales Control. —A daily departmental sales report should 
be given the buyer for comparison with past performance and 
plans. By preparing it each night the buyer is enabled to 
have daily gross sales available each morning. The want slip 
system described in the previous chapter comes into use at this 


328 


THE MERCHANTS’ MANUAL 


moment. The shopping comparison bureau and research 
department contribute towards sales control. 

Stock Control.—If planning, purchases, and sales have 
been properly controlled, stock control is automatically ef¬ 
fected. If the “keeping up” of staple articles, the re-ordering 
of “quick sellers,” and the forcing out of “slow sellers” are to 
be carried on, the number of methods which can be used is 



almost unlimited, depending entirely upon the nature of the 
merchandise and the aggressiveness of the organization. 

In ready-to-wear merchandise departments, the organization 
of the selling force into stock divisions with the responsibility 
of continually inventorying their stocks and reporting short¬ 
ages will prevent lost sales through incomplete stock. There 
are many plans for the display of “tell-tales” or signals when 
stock is low. 





























































































MERCHANDISE CONTROL 


329 


A standardization of staple and commonly wanted mer¬ 
chandise in all sections should be made and stocks frequently 
checked. 

A standardization and definition of “old” merchandise 
should also be made and limit of time in stock placed upon it. 
It should be listed, back-listed, and re-listed periodically until 
action forces it out. At inventory periods a policy should be 
determined upon as to the method of treatment of old mer¬ 
chandise to get it out of stock. 

William Filene’s Sons Company has an interesting stock 
control system, which has proved very satisfactory in practice. 
A visible card index is kept. A complete record of all mer¬ 
chandise by retail price, cost, manufacture and style is 
entered. Each style number is placed on a separate card con¬ 
taining all data—the number received, on order, the number 
sold, marked down, credits, returns, all by quantities and 
dates, and the daily balance on hand of each style. 

Various summaries are made for the division managers and 
buyers. A recapitulation, for example, is drawn off daily of 
the stock on hand and on order, and the present and com¬ 
parative sales for the current month. The buying organization 
is advised on fast-selling numbers as to quantities on hand 
and on order, and sales over a period. The facts on slow- 
selling merchandise are submitted also, with regard to its age, 
its record while on sale, etc., so that any necessary losses may 
be taken promptly. Reports are also issued on the amount of 
old merchandise in stock and the percentage of that old mer¬ 
chandise to the total stock. 

The object of the stock-control system is to give division 
managers and buyers the exact status of their stocks so that 
they can plan their buying operations logically. This policy 
will naturally result in increased profits and merchandise 
turnover and prevent, in so far as possible, injudicious invest¬ 
ment of the stock allowance. 

The following detailed information is available from the 
perpetual stock inventory used: 

1. Make, style, cost, retail, size range, manufacturer, when 
first ordered, first received and put on sale of every piece of 
merchandise coming into stock. 


330 


THE MERCHANTS ’ MANUAL 


2. Stock on hand. 

3. Stock on order and when ordered. 

4. Pieces sold according to size, etc. 

5. Pieces exchanged or credited according to size, etc. 

6. Best selling sizes. 

7. Service of manufacturer shown in deliveries. 

8. The beginning of the decline of the popularity of any 
garment. 

9. Increases or decreases in cost, retail, or both. 

10. If business is being done largely on a very few items, 
balance of stock may be manipulated. 

Profit Control.—The standard initial mark-up should 
appear on the departmental financial plan. This mark-up is 
based on cost at regular terms, plus operating expense and a 
fair margin of profit, determined by the selling power of the 
merchandise and local competition. 

The buyer, by placing the determined retail selling price 
on the duplicate of the order, affords the merchandise office a 
check on the initial mark-up, and by having the percentage of 
mark-up figured on the manufacturer’s invoice when the mer¬ 
chandise manager approves it for payment, a re-check is 
provided. 


CHAPTER XXV 


BUYING 

Buying as carried on today, like so many other store activ¬ 
ities, is the result of gradual evolution. The previous chapter 
dealt with methods of control; this chapter deals with buying 
channels and with the men and women who do the buying 
and handle the merchandise prior to its sale, together with 
the buying policies involved. 

BUYING CHANNELS 

While the large store buys direct from manufacturers, small 
stores must either buy of the jobber or band together for 
mutual buying advantages. The retail store, therefore, may 
buy in the following channels. 

1. Direct from manufacturer. 

2. Through middlemen. 

3. Through cooperative associations. 

4. Through buying exchanges. 

5. Through resident buying offices. 

Manufacturer.—Buying from manufacturers direct saves 
middlemen’s discounts. In the case of the large department 
or specialty store it is generally the fact that quantity pur¬ 
chases direct can be secured at the same prices quoted to job¬ 
bers. A certain specified minimum purchase is usually re¬ 
quired. Small accounts are not taken but are referred to 
jobbers. 

Middlemen.—The small dry goods store in the small town 
cannot get along without the jobber and in certain cities even 
the larger stores find it better to deal with the jobber than buy 
in larger quantities from the manufacturers. The merchan¬ 
dise is bought in small lots and in great variety and the only 
method of carrying a stock sufficiently wide to meet the de¬ 
mand is by buying through jobbers. Jobbers’ salesmen ordi- 

331 


332 


THE MERCHANTS’ MANUAL 


narily visit the smaller stores with samples of stock, while the 
buyers of the larger stores go direct to the source of supply. 

Cooperative Buying Associations.—The advantage to be 
secured in the way of lower prices through cooperative buying 
is self-evident. There are, however, a great many difficulties 
in the way of a successful buying association. 

The success of a plan of this kind depends largely upon the 
circumstances in each particular case. As one authority on 
the subject says, the form of organization is less important 
than the temperamental qualities of the cooperating buyers, 
the class of business done by the different stores, their location, 
business methods, etc. Where stores are “unequally yoked” 
there is sure to be friction and dissatisfaction, no matter how 
theoretically sound the plan of organization may be. The 
personal element must always be a factor of the greatest 
importance. 

It would not be desirable to take any two merchants in any 
one city or town into a resident buying proposition, for the 
very nature of the work of securing merchandise renders it 
almost impossible for competitors to work harmoniously in 
such an organization. Both would carry the same merchan¬ 
dise, bought at the same price and retailed at the same price. 
Such a state of affairs would be likely to create many dis¬ 
satisfactions. 

Syndicates formed for cooperative buying should establish 
headquarters in New York, where the bulk of the buying is 
done. New York has always been the headquarters of the 
most important buying organizations of the country, espe¬ 
cially in style lines. 

Cooperation between all concerned is essential. The fol¬ 
lowing statement comes from a man actively engaged in work 
with a large buying organization. He says: 

The value of such an activity hinges entirely upon the extent to 
which the stores will work together. A group of stores bound 
definitely to do a certain percentage of their purchasing through the 
office can do all the way from 5 to 10 per cent, of their purchases 
and can have many jobber advantages. The trouble with these 
syndicates is that when the order is actually placed, they do not 
act together. One house will want to work with one mill; another 


BUYING 


333 


house with another. One buyer has a favorite concern he has done 
business with for years, and therefore does not care to drop it and 
combine with another. The result is that the purchasing office 
becomes merely a visiting place with much correspondence and 
expense, perhaps following up orders which are hardly worth the 
cost. One group of stores spent a fortune with not very encouraging 
results. The reason was that the buyers would not work together. 
Many tremendous things were planned and ready for execution, but 
when it came to placing orders, the stores could not agree. The 
result w*as that some of the biggest concerns in the country grew 
tired of making propositions which were not accepted. 

Many merchants realize the need for a cooperative buying 
association but rapidly lose their enthusiasm and perspective 
under the actual stress of endeavoring to combine their likes 
and dislikes with the individual preferences of the other mem¬ 
bers of the association. This is particularly true in the matter 
of discounts, which is usually one of the first things discussed 
in taking up cooperative buying. In comparing discounts re¬ 
ceived from various manufacturers, among ten or fifteen stores 
there will be an almost equal variation of discounts. At first 
the stores will compare discounts with each other, but when 
manufacturers know that discounts are being compared they 
often cut them down. Some stores, therefore, feel that co¬ 
operation is causing them a loss in reduction of discounts and 
withhold such information. 

It is essential in a cooperative buying association that the 
secretary should be competent and thoroughly understand the 
work in hand. 

The difficulties which have brought about failure in so many 
cooperative buying associations may be summed up as fol¬ 
lows : 

1. Variety of wants. Inasmuch as members of the associa¬ 
tion are taken from different localities, demand will differ to a 
greater or less degree. There will always be differences of 
opinion as to what merchandise to order. 

2. Placing orders. It is very difficult to place the order to 
the satisfaction of all concerned. 

3. Lack of cooperation among buyers. 

4. Uncertainty whether expense of maintaining offices, etc., 


334 THE MERCHANTS' MANUAL 

would not use up savings effected in quantity discounts se¬ 
cured. 

In general, it would seem that the only entirely successful 
joint buying enterprise is the chain store system where buying 
control is concentrated under one management and where one 
corps of buyers takes care of the wants of all individual stores. 

Buying Exchanges.—The buying exchange as applied to 
dry goods and department stores merchandising is a compara¬ 
tively recent development. It is ordinarily an incorporated 
enterprise, run independently, which acts as manufacturers’ 
agents and not as jobbers or commission men. It is meant to 
provide a centralized market for merchandise distributed 
through department and general stores. 

The Bush Terminal Company is one of the best known buy¬ 
ing exchanges. The sales rooms of manufacturers, both from 
New York City and points all over the country, have been 
brought together and incorporated into departments in such a 
way that visiting buyers may compare many lines and make 
selections with the minimum expenditure of time. Only firms 
which merit the fullest confidence of the trade and which con¬ 
form to the highest standards of business practice are regis¬ 
tered. 

Resident Buyers.—Resident buyers are clearly divided 
into two groups, those who buy for any store, serving as a 
commission house for the manufacturer, and those who are 
established and maintained by out-of-town stores purely for 
their own buying purposes. 

1. Resident buying organizations. The resident buying or¬ 
ganization may be a great convenience or it may be grossly 
abused. Properly managed, it can be of great assistance to the 
out-of-town retailer not large enough to maintain its own resi¬ 
dent office or to send its buyers frequently to the market. 

A typical resident buying organization gives service in mer¬ 
chandising, general information and research, as follows: 

A. MERCHANDISE DIVISION 

1. Market Surveys. Studies the trend of the market, conditions 
and tendencies, style changes and price fluctuations, thereby 
keeping the stores informed in a way that would not be 
possible through their own individual efforts. 


BUYING 


335 


2. Resource Lists. Gathers complete information regarding re¬ 

sources in New York so as to enable the buyer’s time to 
be spent to best advantage. 

3. Buyers Group Meetings. Holds periodic conferences with 

Merchandise Managers and various buying groups to ex¬ 
change experiences and market information, forecasting in 
their respective lines and formulating and discussing mer¬ 
chandising programs and problems. 

4. Cooperative Buying. Brings about such cooperative efforts as 

will tend to produce merchandise more cheaply than can be 
done through individual efforts. 

5. Buying on Special Request. Placing orders on special mer¬ 

chandise. Records are kept of all such orders and these 
orders are followed up until delivered. 

6. Advance Preliminary Survey. Locates the exact merchandise 

wanted, and recommends the resources where the mer¬ 
chandise in question may be secured. 

7. Adjustment Bureau. Adjusts controversies between store and 

manufacturer, acting as mediator. 

B. GENERAL INFORMATION SERVICE 

1. Styles. New York and Paris shopping reports. Study and 

report of model houses. 

2. Materials. Basic conditions in raw materials. Supply of ma¬ 

terials in the hands of manufacturers, jobbers, etc. Style and 
novelty materials. 

3. Demand. New York manufacturers’ selling reports. New 

York retail selling reports. 

C. RESEARCH BUREAU 

1. General research and special studies. Information is collected 

on important matters of general interest to the member 
stores. 

2. Personal Service. Facilities are available for securing infor¬ 

mation as to the eligibility or desirability of candidates for 
positions which any store may wish to fill. 

3. Data Sections. Data files covering matters of interest to the 

merchandising of the departments for which the organization 
buys. 

4. Visits to stores. Arrangements are sometimes made for spe¬ 

cialists to visit a member store to study and advise on 
departmental problems. 

5. Weekly Market Report. New merchandise, style features, 

trends and tendencies. 

6. Telegraphic Information. Of extraordinary declines or in¬ 

creases in the market, of special opportunities for ad¬ 
vantageous purchases, of unusual happenings in wholesale 
and retail circles, etc. 


336 


THE MERCHANTS’ MANUAL 


2. The resident office of the store. Many stores feel that it 
is important to maintain an office in New York as a perma¬ 
nent fixture. The functions of this office will vary from a mere 
place for buyers to congregate to the office having a perma¬ 
nent buyer with a staff of assistants. Many stores use the 
New York office for emergency purchases, sending on orders 
to be filled immediately. Buyers when coming to New York 
receive all information about market conditions, and can keep 
in close touch with the store. 

BUYERS 

In the beginning, the merchandise man was usually the 
buyer of goods, which were turned over to the head of the 
department to sell. With the development of specialized buy¬ 
ers, the merchandise man became the link between buyers and 
the store management. 

The Merchandise Head.—According to John Shepard, Jr., 
the general functions of the merchandise man are four: 

1. The merchandise head should control each of his depart¬ 
ments from the basis of the general rules and policies of the 
store as a whole. 

2. He should know the amount of merchandise that the 
store can best afford to carry in each particular line. 

3. He should know the class of merchandise that the store 
should carry in each department to harmonize with other 
departments. 

4. He should know the general trend of the times, and the 
general conditions that control the carrying of stocks, and 
the selling of these stocks to the public. 

The merchandise man has the outside point of view which 
the buyer necessarily lacks. He watches turnover of stock 
and profits. He studies general conditions and their influence 
upon the merchandise plan. He consults with buyers before 
their trips and gives them advice. 

The Buyer.—The success of a department is dependent 
on the buyer. He not only buys the merchandise but gives 
his active cooperation in selling it. The measure of a buyer’s 
success is, of course, the percentage of profit made by his 
department or departments. The position of buyer in all 


BUYING 337 

stores carries with it great responsibility and equally great 
opportunity. 

It is difficult to define the qualities, inherent or acquired by 
experience, which the buyer should possess. Certainly the 
following should be included: 

1. Knowledge of markets. The buyer does not wait for 
merchandise to come to his attention. He goes and looks for 
it. He frequents the sources of supply. He understands the 
effect of the raw material market on the finished product. He 
extends his study to foreign markets. He should know all 
there is to know about trends. 

2. Knowledge of wants of the community. Equal in impor¬ 
tance to knowledge of the sources of supply is information 
regarding the type of merchandise easiest to sell. This, as 
previously explained, is obtained by means of market research 
work, study of want slips, study of competitors through the 
comparison department, conferences with salespeople, etc. 

3. Knowledge of product. The more the buyer knows about 
the goods which he buys, the better able he will be to perform 
his work efficiently. This does not mean that technical knowl¬ 
edge of the quality of the materials is sufficient. He must, for 
example, know about styles and keep in the closest touch with 
style tendencies, if this element enters into the problem of 
buying for his department or departments. 

4. Knowledge of prices. The buyer should be a good 
trader. He must realize that it is the seller’s purpose to obtain 
as much as possible for the merchandise, while it is his object 
to pay the lowest price for the type of merchandise required. 
This requires an exhaustive knowledge of comparative prices, 
transportation charges, etc. 

5. Observance of system. The buyer must see that bills 
are put through for payment, and that the merchandise is 
the same as ordered. He must keep careful record of purchases 
and sales in accordance with the merchandise control plan 
of the store. Goods must be marked properly. 

6. Sales guidance. The buyer must teach the salespeople 
how to sell the goods he buys. He must tell all he knows about 
the particular goods for their benefit. He must see that his 
department is attractive. He must arrange for display of 

22 


338 


THE MERCHANTS ’ MANUAL 


merchandise from his department. He must delegate sales 
functions to worthy subordinates. 

The Assistant Buyer.—The assistant buyer is the buyer’s 
understudy, trained to perform the buyer’s duties in emer¬ 
gencies or when his superior is away. The assistant buyer 
must keep the buyer informed of everything which may affect 
his or her work. The principal duties are: 

1. Assistance in buying merchandise. The assistant buyer 
follows up demand, inspects samples, sees that stock is kept 
complete in all ways, etc. 

2. Following up merchandise on order. The assistant buyer 
must keep track of shipments, know what is in the receiving 
room, see that merchandise is properly marked, etc. 

3. Advertising the merchandise. The assistant buyer helps 
in making up advertisements, and in many cases takes entire 
charge of window display. 

4. Merchandise in department. The assistant buyer in¬ 
spects the new merchandise, watches for over-supplies, sees 
that prices are changed for mark-downs, etc. 

5. Recording merchandise. The assistant buyer takes much 
of the routine system work from the buyer’s shoulders. 

6. Selling the merchandise. The assistant buyer sees that 
all salespeople are fully informed about the merchandise, and 
that all necessary pressure is brought to bear in getting rid 
of slow-moving merchandise. 

Head of Stock.—The head of the stock, who has been 
promoted from a salesperson, takes care of the merchandise 
after it is bought. The close and intimate contact with stock 
gives the head of stock great influence. Working under the 
assistant buyer, he or she sees that the routine of the depart¬ 
ment as far as selling is concerned is carried out. 

Purchase Orders.—Each department should be supplied 
with individual order books made up in triplicate and num¬ 
bered consecutively. Where buyers are in charge of more than 
one department they should not be permitted to use the same 
order book for all their departments, but should follow the 
plan above mentioned. In this way considerable confusion 
may be avoided. 

As soon as an order is written, the original should be mailed 


BUYING 


339 


to the vendor, the duplicate sent to the office and the tripli¬ 
cate retained by the buyer. The duplicate copy may be filed 
in a department folder, that is, a folder is reserved for each 
department, and in this manner its individual purchases can 
be carefully followed up. As the duplicate orders are filed 
in these folders, a record may be made in the folder. In this 
way all orders placed for delivery during the six months of 
the current season are classified and can easily be followed up 
by a system of signals. A plan of several colors may be de¬ 
vised to suit individual needs, and the series of colors and 
combinations available hardly limit the amount of systems 
which may be installed. 

By such a method it is possible to determine at a glance 
the amount of goods ordered for any department during each 
of the several months in the delivery season, the amount 
ordered for current season delivery, the amount for delivery 
next season, and the total amount of all orders placed. As 
the orders are filed, the duplicates in this folder are attached 
to the invoices and checked on the folder, showing that the 
goods have been received. Cancellations are accounted for in 
red figures and the usual order blanks are used for this pur¬ 
pose. When footing a balance, these numbers are, of course, 
deducted. 

A large store in the New York metropolitan district follows 
out the following purchase order system: 

All orders are issued in triplicate, numbered consecutively. 
On the back of the purchase order are the following stipula¬ 
tions: 

1. All orders for merchandise must be in writing on our 
official order blank. 

2. To be valid, all orders for delivery 30 days or over from 
date must be signed by an officer of this company. 

3. Orders given by telephone must be confirmed on regular 
order blank. 

4. All goods herein ordered are to be forwarded at risk of 
shipper. 

5. Unless otherwise agreed upon, goods are purchased 
f.o.b. our store and freight or express must be prepaid. 


340 


THE MERCHANTS’ MANUAL 


6. We reserve the right to cancel orders or refuse goods or 
return goods not shipped at time specified. 

7. Goods sent in excess or different from order will be re¬ 
turned at expense of shipper. 


ADVANCE ORDER 


Ttlaphooe 


NS 


900 


AI) communication# to receive prompt attention should be addressed to the firm 


- 191 - 


Mestra. . 
Terma— 


No. 

Description 

Quantity 

Sizes 

Price 






















1 
















II 






1 
















1L 

ET 






Please Send us Two Copies of this Order. i'll 





SPECIAL NOTICE: Read Conditions of Order on Back* 
Signature_ 


Form Of, showing printed matter and ruling on face of blank used 
for advance orders. The frinted matter is in black ink excepting the 
following, which are in red: 

This order number must appear on invoices: — No. 900 . 

Invoice must be enclosed with goods. 

SPECIAL NOTICE: Read conditions of order on back. 


Fig. 62 . —Advance purchase order. 

8. Our department number and your name must appear on 
the outside of each package. 

9. This order is given on condition that we are protected 
against all liability, loss, or expense by reason of any patent 
or trade mark litigation now existing or to be hereafter com¬ 
menced, arising out of any infringement of patent or trade 
mark on goods hereby ordered, or any part thereof. 









































BUYING 341 

10 . Our order number and department number must ap¬ 
pear on invoice. Invoice must be enclosed with goods. 

11. We require two copies of all contracts and orders for 
goods subject to future delivery and same will not be valid 
until a copy is returned to you signed by an officer of this 
company. 

12 . It is understood that if at time of delivery there is a 
lower market price, delivery will be made at such lower 
market price. 

Clear statement of purchase conditions will obviate many 
disputes likely to arise over terms. 

The advance purchase order (sec Fig. G2) is peculiar in 
that two copies of the seller's confirmation are required. One 
of these copies is returned again to the seller while the other 
is filed in the receiving department. Advance purchase orders 
must usually be passed by the merchandise office. 

BUYING POLICIES 

The buying policy of the individual store is guided by the 
operating head. For example, the completeness of the stock 
carried, the type of stock carried, and the degree of specializa¬ 
tion, must be taken account of in the merchandising plan. 
Some stores follow out a policy of never being undersold; 
others confine themselves to high quality goods, depending 
largely on the clientele. 

Marshall Field and Company follows a policy of placing 
initial orders made up largely of samples. Samples of all 
houses are compared and salespeople and customers pass 
opinion upon them. Items which seem popular are ordered 
immediately. By such a system much undesirable merchan¬ 
dise is kept out of stock. 

Some firms prefer to send buyers abroad while others make 
purchases from importers. There is no unanimity in buying 
policies, each store meeting its problems after its own fashion. 

Testing Materials.—The movement towards truth in ad¬ 
vertising has had a marked influence in causing many stores 
'to install chemical laboratories for the testing of materials. 
Smaller stores find it necessary to consult a chemist frequently. 
Undoubtedly a department store laboratory is a valuable aid 


342 


THE MERCHANTS ’ MANUAL 


to the buyer in purchasing wisely. It has no authority over 
purchases. It merely gives an opinion as to such matters as 
the percentage of wool or silk, based upon analysis of a 
sample. It passes judgment upon the fastness of a color, or 
the probable wear to be expected of a material of given 
physical properties. In addition, frequently questions as to 
heat conductivity, porosity, bending test, light test, fading, 
washing, perspiration, sizing material, weighting material, 
waterproofing, shine, weight per square yard, etc., must be 
answered. 

The Timothy Eaton Company, of Toronto, Canada, has 
had a testing laboratory in operation for a number of years. 
All advertised goods are checked up in the laboratory for 
accuracy of statements contained therein. Some stores are 
analyzing all goods in stock as rapidly as possible and labeling 
fabrics with the results of the test. 

According to E. B. Millard, head of the testing laboratory 
in a large Boston store, one of the most important activities 
of the laboratory is in connection with adjustment of claims 
of unsatisfactory materials: 

It is the aim of the laboratory, he says, to trace the fault in the 
fabric to its proper source, as a protection for the good name of the 
house and as a service to the customer. If the customer has used 
bleach in the colored wash, or used corrosive toilet preparations, or 
used stockings as a pen wiper, the laboratory saves the store an 
expensive adjustment claim. If, however, the lining of a suit or 
coat fades or crocks off on white clothing, or an undergarment gives 
way on its first washing, it is the laboratory’s place to report the 
probable cause to the proper person within the store, who recom¬ 
mends that adjustment be arranged with the customer. 

Improvement in mechanical processes of manufacture makes 
the laboratory much more important to the store inasmuch 
as it is almost impossible without laboratory aid to distinguish 
between some artificial silks and the natural article. The 
numerous finishing processes cannot be analyzed without 
chemical assistance. Many retail stores will find it profitable 
to maintain small laboratories for testing purposes. 

Buying for Style Departments.—Merchandising, as al¬ 
ready defined, is having what the public want when they want 



BUYING 


343 


it at the price they are willing to pay. To merchandise suc¬ 
cessfully for a style department is one of the most difficult 
problems confronting a buyer. Ultra-styles may mean prestige 
but rarely profits. It is necessary to sense the trend in style 
which will prove popular, stock it prior to the demand, and 
be virtually sold out when the demand is over. The wise 
buyer buys with the styles and not against them. When he 
or she goes into the market to buy the early showings, it is 
necessary to pick out of all these new styles an assortment to 
try out on the public. 

The buyer must be a keen observer. There is a certain 
class of society which prides itself upon setting the fashion. 
The buyer studies what is worn by these fashion leaders. In 
addition, there are Paris and the French importations to be 
considered. Several fashion magazines get out advance notes 
on styles. Finally, there is the gossip of the trade as gleaned 
from conversations, reading of trade paper notices, etc. 

In one store, great stress is laid on meetings of the depart¬ 
ment merchandising organization. A sample of each style 
garment in stock is taken out and considered carefully from 
the standpoint of price, general style features, and value. In 
this way, the weak spots of the entire line show up very 
quickly and can be strengthened at the beginning of the season. 

The shopping office takes particular heed of style offerings 
by competitors, which serves to indicate whether the store is 
ready to meet popular demand. 

One of the peculiarities of style goods is that demand comes 
quickly and falls off rapidly. In the general garment season, 
starting either in September or March, the first month is 
usually good, the second month is better, the third month is 
best. The fourth month begins to show a decrease in sales, 
and the fifth and sixth are even slower. 

During the first three months people buy for style or appear¬ 
ance. During the last three people buy because they need 
the article and price is the predominant buying motive. Profits 
in style departments are usually made during the first three 
months. If excessive mark-downs must be made to move 
goods during the last three months the gains of the first three 
months may be entirely wiped out. 


344 


THE MERCHANTS ’ MANUAL 


Moving the stock in style departments, therefore, is vitally 
important. The head of stock should constantly keep the 
salespeople informed of the slow-moving merchandise and 
secure their cooperation in moving it before mark-downs 
become necessary. 

The buyer finds somewhat the same conditions prevailing 
in his purchasing from the manufacturer that he finds in 
selling to the consumer. At the beginning of the season prices 
are high. The market becomes easier as the season progresses 
until near the end the manufacturer is willing to dispose of 
what he has left at prices sufficient merely to cover his over¬ 
head. He may even be willing to sell at a sacrifice, which is 
the reason why stores are able to offer exceptional end-of-the- 
season values. 

Buying for Staple Departments.—In staple departments 
there are only minor changes during the season. The style 
element may not be entirely suppressed but changes in style 
are comparatively slow. 

Purchases for staple departments may be made in quantities 
and a considerable period in advance, sometimes as much as 
several months. 

While prices for style articles vary a great deal in accord¬ 
ance with the intangible style valuation, the price of staple 
articles must reflect closely the intrinsic value. Numbers to 
be bought at each price line must be considered extremely 
carefully. One store of prominence has adopted the following 
procedure: 

1. All manufacturers of recognized standing should be 
visited and their lines gone through thoroughly. Numbers 
that seem to fit best the prices planned in the model stock 
plan are selected from each manufacturer’s lines. 

2 . Samples from all lines should be assembled and com¬ 
pared for elimination and final selection. 

3. The manufacturer should be considered on the following 
basis: 

a. Desirability of product. 

b. Financial condition. 

c. Factory equipment. 

d. Reliability. 


BUYING 


345 


e. Past experience with him. 

The close competition in staple lines makes range in mark¬ 
up fairly limited. It is essential to have the bulk of the stock 
at best selling sizes, since the mark-downs are rarely in stand¬ 
ard sizes, but rather in very large or very small sizes. 

The buyer for the style departments usually is given the 
largest amount of advertising space, because publicity is re¬ 
quired to move styles. Staple departments can count on a 
certain current of demand and the building up of an estab¬ 
lished clientele. Style customers shop around. Staple cus¬ 
tomers usually buy without shopping, although they make a 
point of knowing comparative prices. 

Staple departments should, however, be given newspaper 
advertising and window display space from time to time. 
Counter displays and signs can always be used to attract 
business. 

Buying Ethics.—-While buyers should make every effort 
to buy direct of manufacturers, jobbers should always be 
treated fairly so that they will be willing to help in case the 
buyer needs to fill in at short notice. 

Local manufacturers are a great convenience and it often 
pays to cultivate them because of the facility with which sup¬ 
plies can be obtained. 

Buyers should not accept favors from sellers or manufac¬ 
turers, either in the way of service or entertainment. If it 
becomes necessary to receive a favor, a point should be made 
to return it promptly so that there will be absolutely no obli¬ 
gation, either expressed or implied, to buy other than where 
the merchandise and the price warrant. 

In asking for exclusive rights for goods in a certain terri¬ 
tory, it will be necessary to plan to use a fairly large amount 
of this merchandise during the season. If the buyer does not 
feel that he is able to accept this responsibility, the manufac¬ 
turer cannot be expected to deprive himself of the opportunity 
to sell his line elsewhere. 

Prompt deliveries and quality merchandise may be more 
important than price, especially in style lines. 

Fair treatment of manufacturers always pays. That is, 
goods should not be returned or orders canceled without due 


346 


THE MERCHANTS’ MANUAL 


cause. Many complaints are heard of manufacturers accept¬ 
ing an order for one thing and substituting another. Some 
buyers have found that in placing an order it is helpful to 
write a fairly careful description of the sample on the order 
form. This discourages substitution, for it remains a clear 
evidence of what the buyer really ordered. 

Department Dovetailing.—Each department in the store 
will naturally fit in to the whole organization. It will be more 
closely connected with some departments than others. The 
relation may be considered, as the Dry Goods Economist re¬ 
marks, from a number of angles. There is the physical rela¬ 
tion between departments, the grouping of departments under 
one and the same head, the uniform selling policy, the uni¬ 
formity in grade of merchandise carried, the duplication of 
stocks, lines linked together in advertising, cooperation in dis¬ 
play, etc. 

The former bitter rivalry between department heads has 
generally developed into a friendly rivalry. This is much more 
conducive to the general level of merchandise excellence which 
should prevail throughout the store. That is, if the policy is 
to cater to a certain class of people, every department in the 
store should reflect that same policy in the character of the 
goods displayed for sale. 

The management of the store is largely responsible for the 
good feeling which should exist between the heads of the vari¬ 
ous departments. In one well-known store it is an unwritten 
law that the heads shall lunch together in the public restaurant 
within the store. 

Conflicts should be settled among buyers or straightened out 
from above. There are certain natural duplications of goods 
carried, for example, which may cause friction. Notions will 
overlap with inexpensive jewelry, trimmings, art needlework, 
etc. Dress and waist departments may find themselves carry¬ 
ing some lines of similar stock. 

It is frequently possible to secure greater merchandising 
effectiveness through the display of related lines together than 
it is separately. Women’s outer apparel departments, for ex¬ 
ample, can always find ways of cooperating. 

More and more it is being felt that the buyer is not an 


BUYING 347 

individual independent entity, but an integral part in the 
correlation of store activities. 

Buyers’ Reports.—Buyers’ reports may be either made for 
the buyers by the merchandise office or may be required of the 
buyers themselves. 

1 . Reports made for buyers by merchandise office. The pur¬ 
pose of such reports is to afford the buyer a business barom¬ 
eter of conditions in his department. The slogan of the 
modern store merchandising department is to keep the buyer 
informed. There is, however, a difference of opinion as to what 
information should be furnished. 

Table VI illustrates a form made to fit a loose-leaf binder 
in which it may be filed by the buyers for their future refer¬ 
ence. If a buyer has charge of more than one department, his 
binder may be subdivided so that a separate section may be 
set apart for each department. 

The form is in three sections; the upper section contains a 
statement of purchases, sales, and reductions for the week; the 
middle one contains a statement of the condition of stock, un¬ 
filled orders, and balance to buy; and the lower part contains 
a statement of purchases, sales, reductions, etc., cumulative 
from the beginning of the period to date, including the amounts 
entered in the upper section of the report. 

The lower part of this report is printed in red and the en¬ 
tries are made in red, while the other parts are made in black. 

In this particular organization the reports are given to the 
general manager to review before going to the buyers. If 
there is anything of importance to which he desires to call 
their attention, a notation may be made under “remarks” 
before the report is handed on. 

Figure 63 represents a form used by a very progressive 
store. It differs radically from the preceding form in that the 
buyer is furnished with the operating expense figures of his de¬ 
partment as well as with merchandise data. Many firms are 
adopting this modern view and believe that to supply the 
buyer with expense data is to create a bond of cooperation 
between the buyer and the management. One can readily see 
how this result is brought about. The average buyer is not 
prone to interest himself greatly in the general operating ex- 


348 


THE MERCHANTS' MANUAL 


Table VI.— Form Used by Buyers 
STATEMENT 

Week.May 7.1921 

Dept. 26 


1920 1921 


Purchases (Retail) 

3,148 

02 

5,210 

00 

Sales (C) 

200 

03 

2,406 

35 

Reductions (a) 






STOCK 


Balance on Hand (Retail) 

43,583 

38 

48,994 

61 

Days to Sell 

256 


224 


Unfilled Orders (Cost) 

2,530 

63 

3,320 

85 

Possible to Buy (Cost) 

8,624 

63 

8,936 

32 


LAST INVENTORY TO DATE 


Purchases (Retail) 

11,800 

83 

16,313 

45 

Sales (a) 

3,446 

45 

4,179 

27 

Reductions (a) 





Average Marked 





Inventory and Purchases (Per cent) 

28.7 


29.3 


Expected to Realize (Per cent) 

27.5 


27 5 


REMARKS 
































Departments Month Period 


BUYING 


349 


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Fig. 63.—Another form of buyer’s record. 




































































































































350 


THE MERCHANTS' MANUAL 


pense of his department. He is thoroughly satisfied if his 
merchandise is selling and his gross profit seems sufficiently 
high. He is continually asking for more advertising, more 
space, and more window displays, more salespeople, and for¬ 
ever resenting any curtailment of expense. At the end of the 
season when he is acquainted with the expenses of his depart¬ 
ment he suffers a rude awakening. He finds that his margin 
of profit has been greatly reduced by heavy expenses which he 
had insisted upon despite the protests of the management. 

On the other hand, when the buyer is acquainted with his 
operating expenses weekly or monthly, and is given an oppor¬ 
tunity to compare them with his expense for a similar period 
during the previous year, it arouses in him an interest in his 
expense data and curbs his tendency to increase expenses with¬ 
out necessity. He realizes as never before that the manage¬ 
ment is working with him and not against him, and he is ready 
to lend his full cooperation. 

The expense data which should be of interest to the buyer 
are as follows: 

Administrative and general. 

Occupancy. 

Publicity. 

Buying. 

Selling. 

This classification of expense covers the field thoroughly, 
and enables the buyer to tell at a glance what the various 
items of his expense are as well as the total. 

In addition to expense this form keeps the buyer posted on 
the earnings of his department, and supplies additional useful 
information such as outstanding orders, number of sales, aver¬ 
age sale, and turnover statistics. 

The form itself is very simple in its layout and all the data 
for the same month may be kept on one page over a period 
of years. 

Figure 64 is used in a large department store in the East. 
It is issued once a week by the merchandise office and contains 
information of vital interest to the buyers. 

Such a report as this affords the buyer a medium of com¬ 
parison between the business of the current week and the 


BUYING 


351 


DEPT. NO. 


Week Ending 

This Year 

Last Year 

Per Cent 
Increase 
Decrease 

Purchases (bills passed) ok. 

Purchases (inventory) 

(Jan. 1, inch) to date 

Sales week 

Sales to date 

Reductions week 

Reductions to date 

Mark Up, per cent week 

Mark Up, per cent to date 

Stock 

Bills not passed 

Total Stock 

Orders Outstanding 

Advertising, per cent week 

Advertising, per cent to date 

Wages, per cent week 

Wages, per cent to date 

Discount, per cent to first of month 







F IG . 64.—Report to buyers made by merchandise office. 











352 


THE MERCHANTS , MANUAL 


business of the corresponding week of the preceding year. The 
buyer is supplied with information regarding advertising, 
salary expenses and other details, such as outstanding orders, 
mark-up, discounts, reductions and sales for the week. This 
store has adopted the policy of giving stock figures to buyers 
at retail only. 

The forms are made out in duplicate—one copy is filed in 
the merchandise office; the other copy is kept in a loose-leaf 
binder by the buyer, and serves as an authentic record of 
business throughout the year contrasted with the activities of 
the preceding year. 

2. Reports made by buyers. All buyers have to make 
certain reports to the merchandise manager as heads of their 
departments, and such reports are exceedingly important 
documents. 

At R. H. Macy and Company’s store the buyer makes a 
report each Monday morning, which contains the following 
specified information, describing activities both from a sea¬ 
sonal and weekly basis: 

1. Sales for the week ending Saturday, also for the season 
up to that point. 

2. The same record for the stock. 

3. The percentage of the marking of profits on bills for the 
week and for the season. 

4. Reductions for the week and for the season. 

5. Average salescheck for the week (amount of sales of the 
department divided by the number of transactions). On a 
rising market this will be large. On a falling market, the 
average salescheck will be much lower. 

6. The amount of advertising for the department during 
that week, and the percentage of advertising for the season. 

7. The salaries paid to salespeople during that week and the 
percentage for the season. 

8. The cash discounts earned by the department for the 
week and for the season. 

9. The percentage of refunds (amount of money returned 
divided into total sales). 

10 . Information on all the above points for the correspond¬ 
ing week of the preceding year. 


BUYING 


353 


11. A statement of the amount of orders outstanding. 

12. Each officer of the firm gets a statement of all stock 
which is more than a year old (on wearing apparel the limit 
is six months). 

Buyers’ Compensation. —It is almost a universal custom 
to recompense the buyer on the basis of the successful opera¬ 
tion of his or her department. A simple method is to go back 
over past records and establish what might be regarded as a 
standard gross profit, to fix the minimum sales necessary at a 
point properly commensurate with the buyers’ present fixed 
salary, and then to give him a percentage of the excess over 
that quota of sales, provided he maintains the standard per¬ 
centage of gross profit. 

In one large store there is a system of deferred salaries which 
allows the buyer to set his or her salary. In addition to a 
drawing account there is a sales and bonus schedule, and a de¬ 
mand mark-up minimum below which there is no bonus paid. 

Above that amount there is a certain amount paid at 
the end of the year which is determined by the sales grade 
attained, in which connection is considered the mark-up 
attained. 

We have found, says one of the officials of the store, that it was well 
to permit the buyers to get through this system as much as possible 
of their total earnings. In most cases they amount to one-third of 
their total earnings. In some cases it amounts to more than the 
salary, and by focusing the attention of the buyer upon the mark-up 
as well as upon the sales, it has proved to be a very great stimulus 
in increasing business. Since the adoption of that system there has 
not been a buyer come to the office for an increase in salary, nor 
has there been a case of a buyer leaving because of unsatisfactory 
compensation. 

Some stores feel that the percentage of profit should not be 
a factor in determining salaries, but that buyers should be 
compensated on a straight percentage basis. That is, the firm 
may decide to be satisfied with smaller profits in times of de¬ 
creasing prices in order to maintain its volume of sales, and if 
remuneration were on percentage of profit there might be dis¬ 
satisfaction among buyers. 


23 


354 


THE MERCHANTS ’ MANUAL 


Discounts.—Discounts are, in reality, inducements offered 
by manufacturers to buyers whose business is regarded as 
especially desirable. To do away with discounts would merely 
mean that some other concession would be offered. As the 
National Retail Dry Goods Association said, at the time of 
the war, when the agitation against discounts was at its 
height: 

The discount is in a sense a certain degree of profit claimed in 
advance of the story told by the store’s books at the end of the 
year, and, in many instances, if it were not for the discounts, the 
story on the books would be one of loss rather than of profit. 

Manufacturers would like to cut out all discounts and sell 
for cash net. Retailers are firm believers in the necessity of 
discounts. There is, however, great feeling against the sliding 
scale of discounts which allows the large store to procure 
merchandise at a lower cost than the small store. 

The retailer’s point of view is summed up in a reply by a 
Middle West merchant to a circular letter requesting informa¬ 
tion on discounts sent out by the American Exchange National 
Bank of New York. The letter says in part: 

1. If “credit” is a necessity in modern business conditions, 
then the necessity for “terms” follows as a corollary. 

2. If “terms” are advantageous or necessary, the “dis¬ 
counts” must go hand in hand with “terms” to equalize any 
desired change to be taken in same. 

3. If we eliminate “discounts” as fallacious, let us in turn 
eliminate “terms” and also “credit” and get back to the days 
of barter and exchange of one commodity for another. 

The letter goes on to point out that one of the foundation 
principles of trade is that the retailer must have a time term 
to allow for transportation and a fair chance for turnover. In 
normal times the item of “discount” has always been very im¬ 
portant to the retailer and often has been the one thing that 
saved the season. If goods are sold on a thirty or sixty day 
basis the purchaser who can pay cash is entitled to a fair 
recompense and something more than a mere 6 per cent inter¬ 
est. If the manufacturer sells only on time he must become 
more and more a heavier borrower at his banks. The quoted 


BUYING 


355 


objection that many overrun the terms and remit when they 
please is not controlling and can be corrected. 

The benefit of discounts can only be realized by taking ad¬ 
vantage of them. While the merchant who takes terms rather 
than discounts has the use of the money while all or some of 
the stock purchased is being turned over, he does not have the 
extra profit which taking up the discount would have allowed 
him. One per cent ten days is equal to 18 per cent during the 
year. In some lines of goods future dating is customary in 
addition to cash discount. In the majority of cases failure to 
take advantage of discounts means the merchant is paying a 
higher percentage for the use of the money than he would 
have to pay at the bank. 




CHAPTER XXVI 

STOCK KEEPING 

Before there is any discussion of mark-up and inventory it 
is necessary to understand the advantages of the retail system 
of accounting over the old-fashioned cost system. The opera¬ 
tion of the system, as described by T. L. Blanke, Director of 
Accounting and Control, Controllers’ Congress, National Re¬ 
tail Dry Goods Association, is very simple. 

It is necessary to take the inventory of merchandise on 
hand in each selling department at both cost and retail in 
order to establish the average percentage of mark-up to begin 
with. To this is added the value of all merchandise, as re¬ 
ceived, by departments at cost and retail. These cost and 
retail values are accumulated during the year by periods. 

The total retail value minus the total cost value equals the 
total purchase mark-up to date, which, divided by the total 
retail value, gives the percentage of purchase mark-up to date. 
To arrive at the retail value of the goods on hand at the end 
of any period, the above accumulated total is credited with 
the total sales at retail, and all reductions at selling price, less 
such mark-ups as are cancellations of mark-downs previously 
taken. The resultant figure is the value of the inventory at 
hand at retail at the close of the period, whether weekly, 
monthly, or by other measure of time. 

See Fig. 65, which gives a formula meeting the govern¬ 
ment’s requirements. Physical inventories, by departments, 
are taken of the goods on hand at retail at the close of the 
fiscal year, and the retail value of the book inventory of goods 
on hand is adjusted accordingly. The cost value of the goods 
on hand is then computed by subtracting from 100 per cent, 
the percentage of purchase mark-up, which gives the percent¬ 
age of cost, and multiplying the retail value of goods on hand 
by such percentage of cost. 


356 



STOCK KEEPING 


357 


FORMULA 



(1) 

Cost 

(2) 

Retail 

(3) 

Mark-up 

(4) 

Per cent of 
Mark-up 

1 Opening Inventory (lines 9 and 10 of pre¬ 
ceding period). 





2 Purchases. 


XXX XX 

XXX XX 

XXX XX 

XXX XX 

XXX XX 

3 Freight Express and Cartage, Inward. 

4 Additional Mark-ups, less additional 

Mark-up Cancellations. 

XXX XX 

6 Total of Inventory, plus Additions. 


. 

. 

... . . 

6 Net Sales. 

XXX XX 

XXX XX 

. 

XXX XX 

XXX XX 

XXX XX 

XXX XX 

7 Mark-downs, less Mark-down Cancella¬ 
tions. 


8 Total Retail Deduction (sum of items 6 and 
7). 

XXX XX 

. 

XXX XX 

XXX XX 


9 Resultant Retail Inventory (Retail Inven¬ 
tory on line 5, Column 2, minus item 8). . 
11) Calculation of Cost Percentage: 

(a) Total Percentage.100 per cent 

(b) Percentage of Mar -up 

(line 5, Col. 4).per cent 

(c) Percentage of Cost [(a) 

minus (b)].per cent 

11 Cost Inventory (item 10 (c) applied to 
item 9). 

XXX XX 

XXX XX 

XXX XX 

XXX XX 

XXX XX 

• • • • • 

XXX XX 

XXX XX 

12 Resultant Mark-up and Percentage (item 
9, minus item 11). 

XXX XX 

13 Gross Cost of Merchandise Sold (difference 
between Cost Inventories on lines 5 and 

11). 


XXX XX 

XX XX 

XXX XX 




Fig. 65.—Retail inventory method. 



















































358 


THE MERCHANTS ’ MANUAL 


Advantages of Retail System. —The chief advantages of 
the retail system, according to Mr. Blanke, are: 

1. It provides a check on losses, errors and inaccuracies. 
The book inventory may be checked against the physical in¬ 
ventory, verifying the work of both the book records and of 
those who handle the stock. If large differences exist, the 
work can be checked back and errors corrected. The book 
inventory is corrected by making adjustments for error’s at 
the time discovered or determined. 

2 . It affords a definite and consistent basis of taking and 
valuing inventories for financial statement purposes. The 
banker will know, as well as the owner, how the inventory was 
arrived at. It will establish confidence in the owner’s busi¬ 
ness by the banker, and make it .easier to borrow money in 
time of need. 

3. It is good accounting practice to price an inventory at 
cost or market, whichever is the lower. It is not only good 
accounting, but also conservative financing to do so. The 
retail method has a tendency to value the merchandise at cost 
when market is higher, and at value or market when the 
market is lower. 

4. It has been accepted by the Internal Revenue Depart¬ 
ment because it was felt that the ease of verification is one of 
the most important features. Complete records of every step 
from the purchase of items to their final disposition by sale 
afford an accurate and prompt check. 

5. It provides a basis for the adjustment of fire losses. 
Knowledge of just what amount of stock is carried in each 
department is important, especially where a co-insurance 
clause exists. 

6 . It acts as the basis for the controlling of merchandise 
stocks. Unless the merchandise manager knows at least once 
a week the amount of stock in each department, the size of the 
inventory cannot be controlled nor stock turnover determined. 

7. It provides details for a complete monthly operating 
statement, making it possible to issue an accurate profit and 
loss statement for the store as a whole and also for each 
individual department. 

8 . It saves time at the close of the fiscal period when the 


STOCK KEEPING 


359 


physical inventory is taken. With the system in operation, 
it is necessary to take the inventory at retail only. This 
eliminates the probabilities of errors through the copying and 
decoding of cost marks. Further, it takes time to refer to cost 
books from stock numbers on the inventory. This will not be 
necessary under the retail inventory system. 

Stock Taking Methods.—Inventories are usually taken 
in retail stores at periodic intervals.* Modern methods have 
done away with the antiquated method of closing the store 
during the process of inventorying. The taking of the inven¬ 
tory should be so planned and organized in advance that only 
a few days should be needed to complete the task. In large 
stores inventories are generally taken on January 31 and 
July 31. The inventory is taken by departments and mer¬ 
chandise in each department should be carefully arranged 
beforehand as to lines, sizes, and qualities. In some depart¬ 
ments carrying small articles, such as notions, toilet goods, 
etc., the counting is done in advance and a tag such as illus¬ 
trated in Fig. 66 is attached to each compartment, drawer, 
or box to show the number of articles within, with spaces fol¬ 
lowing to indicate the number taken out and sold between the 
time of counting and the time of actual inventory. 

Each department must be supplied with inventory sheets, 
the loose leaf system being preferable to the bound inventory 
book. Sheets are numbered consecutively so that if any of 
them are lost, the fact will become apparent by a mere check¬ 
ing of the pages. The top of the sheet should have blank 
spaces for the department number or letter, the date, and the 
names of those who use it. 

The employees of the department should be divided into 
teams or pairs. Each buyer normally takes charge of his own 
department. In case the buyer is in charge of several depart¬ 
ments, he should delegate some one to supervise the work in 
each of them. 

♦Rulings have been made by the office of Internal Revenue (U. S. 
Treasury Department) as to the “Retail Method” of pricing inven¬ 
tories, and also the requirements where change is to be made from 
“Cost” to “Retail” system. Particulars can be obtained from the 
above-named office, at Washington, D. C. 


360 


THE MERCHANTS’ MANUAL 


One person should call off the stock on passing from item 
to item, and an assistant should enter the item on the sheet, 
repeating the item and its quantity to the one who calls it. 
Repeating is an indication that the figures are correctly under¬ 
stood. The actual work of the stock taking is done by the 
stores’ regular organization, as it is more familiar with the 


INVENTORY m 27798 

Dept. No. 

Location 

Counted and Listed by 

Verified by 

Article or Description 

Season and Month Lot No. Mfgr's No. 

State Unit—Only, Dozens, Gross, Hundreds, Sets, Pieces, Yards, etc. 

Quantity Counted 

Quantity Taken Away 








- 




-- 

Total Count 

Total Taken Away 

Total Net Quantity 

SELLING PRICE 

Unit 

Dollars Cents 



Final Tag No. 

EXTENSION 



Dollars 

Cents 





Fig. 66.—Inventory tag. 


stock and local conditions. In many stores extra clerical 
workers are employed to extend the sheets and total them. 
The information to be gathered by inventorying should be: 

1. The quantity or number of items. 

2. The age of the merchandise or time of purchase. 

3. The cost price when operating on the cost system, and 
the selling price when operating on the retail inventory method. 








































STOCK KEEPING 


361 


4. The selling price. 

The method of taking inventory will depend on whether it 
is done during or outside of working hours, and whether yard 
goods or piece goods are being inventoried. 

By spreading the actual inventory taking over a month or 
more, congestion and confusion will be avoided, and time 
allowed for investigation of discrepancies and irregularities. 

Forms.—The use of the tag, Fig. 66, allows the preparation 
of inventories in advance of the actual date of inventory. It 
is common practice to indicate goods sold after the tag is 
made up in a special column, although in some stores the old 
marks are rubbed out and the new ones put in. 

Figure 67 shows an inventory form in frequent use. Here 
an arbitrary letter is assigned to each season. For example, 
“A” means this season’s goods, “B” last season’s, and “C” 
goods purchased last year, etc. These code letters are warn¬ 
ing signals for goods overlong in stock. The amount of goods 
on hand from each season may readily be ascertained. 

When merchandise is being inventoried at both cost and 
retail, a double column, one for cost and one for retail selling 
price, will be necessary under each letter representing length 
of time in stock. 

Figure 68 shows a desirable form for use in figuring inven¬ 
tory at retail. Figure 69 shows a form for inventories to be 
taken at cost or market, whichever is lower. All columns 
should be filled in in both cases. 

Under the retail method it is not necessary for all depart¬ 
ments to take inventory at the same time. 

The first extension on the sheets is made on the stub to the 
right and the stub totaled. Stubs are then detached by the 
person in charge and the second extension made and totaled. 
After both extensions have been completed, the stub total is 
compared with the second extension total, and, if not correct, 
the error is located and corrected. 

The usual method in the past was to take inventory at 
cost, or, if the retail price had been reduced or the market 
had declined, the goods were entered at a correspondingly re¬ 
duced figure. This practice, however, is not sanctioned by 
income tax officials. As noted previously, the modern method 


362 


THE MERCHANTS’ MANUAL 




>. 

_o 


>* 

£> 


FIRST 

EXTENSION 



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8 

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PRICE 








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UNIT 



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04 

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03 

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QUANTITY 




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5 

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DESCRIPTION 





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Fig. 67.—Inventory form. 

























































































































STOCK KEEPING 


363 




Fig. 68.—Desirable form for use in figuring inventory at retail. 













































































































































































































364 


THE MERCHANTS ’ MANUAL 



Fig. 69.—Form for inventory to be taken at «ost or market. 















































































































































































STOCK KEEPING 


365 


\ 

is to list all goods at retail, or cost and retail. This shows not 
only the value of the merchandise, but also the amount of 
mark-up involved, and its proportion of profit, thus enabling 
the retailer to realize that something must be done to increase 
his business. 

Inventory Errors.—Since the net profit of each depart¬ 
ment, and of the business as a whole, is dependent upon the 
accuracy of the physical inventory, the importance of throw¬ 
ing all possible safeguards round the figures is self-evident. 
The following list shows some of the possible errors which 
might have a serious effect upon the final results: 

1. Failure to include some items in the inventory. 

2. Including the same stock twice. 

3. Failure to make a correct record of sales and returns during the 

periods of inventory taking. 

4. Error in calling to employee listing inventory. 

5. Error in listing on inventory sheets. 

6 Error in extensions. 

7. Error in footing. 

8. Error in summarizing inventory sheets. 

9. Misunderstanding of instructions. 

10. Error in including merchandise in inventory not charged to 

department. 

11. Error in excluding merchandise from inventory that has been 

charged to department. 

12. Merchandise in wrong stock room and listed on wrong sheet. 

13. Deliberate padding of inventory by buyer or department manager. 

If the inventory is taken at retail and a book inventory is 
maintained in the general office which does not agree with the 
physical inventory, it will be necessary, in order to locate the 
error, to give attention to the following possibilities, which 
must be considered in addition to those already stated above: 

1. Sales credited to wrong department by salesclerks. 

2. Sales credited to wrong department by auditors. 

3. Refunds and returns charged to wrong departments. 

4. Merchandise charged to wrong department. 

5. Crediting wrong department with merchandise claims. 

6. Error in general office records in figuring stock. 

7. Over measure or over weight to customers. 

8. Theft by customers or employees. 

9. Error in previous inventory. 

10. Merchandise received short but checked in as correct. 


366 


THE MERCHANTS’ MANUAL 


11. Failure to enter claim for damaged or short shipment. 

12. Merchandise marked at a retail price different from that shown on 

invoice by the buyer at time of purchase. 

13. Merchandise lost between receiving room and department. 

14. Merchandise delivered to customers without salescheck being made. 

15. Failure to report or record merchandise transfers. 

16. Merchandise out of department for display purposes not inventoried. 

17. Merchandise out on memorandum or approval not inventoried. 

18. Contract Department stock not kept separate. 

19. Additional mark-ups not reported. 

20. Mark-down cancellations not reported. 

21. Failure to report or record mark-downs due to the following causes: 

Special sales 

Depreciation of merchandise 

Merchandise becoming out of date or out of style 

Employees’ discounts 

Breakage 

Merchandise damaged by display or handling 
Returned merchandise which cannot be sold at original price 
Allowance to customers where no merchandise is returned 
Remnants and odd lots 

Replacement of merchandise on adjustments 
Where merchandise is placed in stock at one price and later sold 
at a quantity price. 

If the inventory is not taken at retail, but at cost only, and 
it is desired to check the physical inventory with the esti¬ 
mated cost inventory maintained on the general books, there 
must be taken into consideration in addition to the first group 
of errors and all of the second group except Nos. 12, 19, 20 
and 21, the following possibilities: 

1. Use of wrong percentage for determining book inventory. 

2. Differences in prices due to rising or falling market. 

3. Substitution of market price in place of the cost on certain items. 

4. Deductions or additions made by the department and not by the 

office or vice versa on such items as discount, freight, buying 
expense, etc. 

5. Error in costing where the same article is in stock which has been 

purchased at various cost prices. 

6. Error in office records. 

Perpetual Stock Inventories.—The perpetual or running 

inventory is coming to be a very necessary part of retail stock- 
keeping systems in certain departments. By working out the 
main principles of a system and adapting it to the needs of 



STOCK KEEPING 


367 


the individual departments, the perpetual inventory becomes 
a highly valuable aid to the buyer. For example, the per¬ 
petual inventory will show: 

1. Make, style, cost, retail, size range, manufacturer, when ordered, 

first received, and put on sale of every piece of merchandise. 

2. Stock on hand. 

3. Stock on order and when ordered. 

4. Pieces sold according to size. 

5. Pieces exchanged or credited according to size. 

6. Best selling sizes. 

7. Increases or decreases in cost or retail or both. 

This information will prevent overbuying, call attention to 
slow-moving merchandise, increase number of turnovers, and 
minimize mark-downs. 

The perpetual inventory should be started directly after the 
physical inventory in order that all goods on hand may be 
included. Perpetual inventories will not come out exactly 
with physical inventories owing to the natural shrinkage of 
stock from theft, errors, etc. The actual discrepancies, how¬ 
ever, should not be large. One store doing a business of over 
$6,000,000 a year is said to have had the theoretical inventory 
come out within $500 of the physical inventory. 

The following simple perpetual inventory method is de¬ 
scribed by Ernest C. blastings in the Dry Goods Economist. 
A book is secured large enough to allow rulings similar to 
those in Fig. 70. Each page should have space sufficient for 
a month, the left-hand side being reserved for sales and the 
right hand for buying. The headings of the columns, of course, 
may be varied at will. 

Under each departmental heading are two columns, the left- 
hand for sales and the right-hand for mark-downs. Under 
sales would be noted net sales and mark-downs for each day. 
Under buying all “purchases” and “on orders” would be en¬ 
tered. All that is necessary to do in order to find the amount 
of merchandise outstanding is to subtract total purchases from 
on orders. 

The above, of course, is an extremely simple method. The 
system can be expanded, however, to include various units of a 


368 


THE MERCHANTS 1 MANUAL 


department. Instead of waists, headings can be silk waists, 
cotton waists, sports waists, etc. 

There are probably hundreds of perpetual inventory systems 
in use but all of them rely on one factor for their usefulness. 
They must be kept up faithfully day by day. Otherwise 
they cannot serve the purpose for which they are intended. 


SALES 


SILKS 

HOSIERY 

MILLINERY 

notions 

GLOVES 

WAISTS 

INVENTORY- 














SALES 


SALES 

makA— 

DOWNS 

SALES 

DOWNS* 

SALES 


SALES 

"°w s 

SAI ES 

OO AfJS 

DATE 



























1 

BUYING 


SILKS 

HOSIERY 

MILLINERY 

NOTIONS 

CLOVES 

WAISTS 

INVENTORY 







1 






'URCHAAL' 


■URCHASE5 


PURCHASES 

ON ORDER 

PURCHASES 


JHCHASEJ 


‘URCMASES 

>N ORDCF 

DATE 




















u 


Fig. 70.—Perpetual stock inventory sheet. 


Price Marking.—There are no standard systems of private 
cost-marking of merchandise but there are several points 
which most merchants take into consideration when preparing 
price labels and tickets. It is considered necessary that as 
little marking as possible appear on the price tickets when the 
goods reach the counter. This is in order that the selling 
price itself be plain for the customer to read and not likely to 
be confused with other markings. The more brief the mark¬ 
ings, the less time consumed. 













































STOCK KEEPING 


369 


Many large stores today do not care to have anything on 
the price tags to indicate what the purchase price of the article 
was, because almost any code system is worked out in a short 
time by salespeople or customers who may be anxious to 
know it. 

One large department store follows out a pricing policy 
based almost entirely on the time the article remains on sale. 
Having made sure that the selling price is right, the goods are 
displayed and pushed. If they remain in stock for too long 
a time, an investigation is made. If the selling price proves to 
be the obstacle to remedy turnover, the goods are marked 
down to whatever figure will sell them, even if below cost. 
In such a case, the date of purchase is the important informa¬ 
tion. 

Codes.—Just as on the inventory, it is sometimes advisable 
to mark tags in some way to indicate the date of their being 
put on sale. Some stores use a letter and a figure to indicate 
the period. “A” might be used for this year’s purchase and 
“B” for those of the year before. The year might be divided 
up into six months’ periods or perhaps quarters. In the latter 
case “B3” on a tag would denote that the merchandise was 
bought in the third quarter of the preceding year. 

The Dry Goods Review says: 

In cases where it is found advisable to indicate figures, it is better 
to use a more detailed code than the ordinary alphabetical one, where 
“a” means 1, “b” means 2, “c” means 3, etc. A word or phrase of 
ten letters is preferable. These should not have any repeated letters, 
as this would give two interpretations to the one letter. Such words 
as “monarch fly,” “marking out,” “dark violet,” etc., would be suit¬ 
able. The letters are numbered 1, 2, 3, 4, 5, 6, 7, 8, 9, 0, starting 
either at the right or left; then the letter is used instead of the 
figure where desired. 

A certain Wisconsin dry goods store uses a price marking 
system which shows when goods were placed in stock and 
cost. Goods are marked with three or four numerals and one 
letter. The letter refers to the six-month period in which the 
merchandise was purchased. The numeral at the opposite end 
from the letter refers to the month in the buying period. When 
a definite number, as for example, two, has been subtracted 


24 






370 


THE MERCHANTS ’ MANUAL 


from each of the intervening figures the cost of the merchandise 
is obtained. 

For instance, if the goods are marked “364 B” the “B” refers 
to the second six months of 1922 and the first number “3” 
refers to the third month in that period, or September. When 
“2” has been subtracted from both of the middle figures, the 
cost price of 42 cents is readily found. Such a system is valu¬ 
able when quality of merchandise varies according to the 
period in which it was manufactured. 

Under the retail inventory method, it is not necessary to 
code the cost figures, inasmuch as the inventory is taken at 
retail only, after the first year’s operation. Stores operating 
under this system mark only the season letter and invoice 
number in addition to the retail price on the price tag. 

Price Changes.—No inventory system can be accurate 
without careful attention to price changing, both up and 
down. This can be done either through a mark-down depart¬ 
ment or having buyers report daily on the subject. 

In the J. L. Hudson Company of Detroit all re-marking is 
done by the marking room people who bring the merchandise 
into the marking room for change if possible. When the 
nature of the goods does not permit this, it goes into the selling 
department with the new ticket and price corrections are made 
there. No selling department is allowed to have unattached 
price tickets. Price changes are never allowed to be made by 
crossing out the old mark and making a new one. New tags 
must be attached in all cases. Where comparison of old and 
new prices is desired, both tags are allowed to remain. 

In every case supervision of mark-downs is necessary. In 
Mandel Brothers store no mark-downs are allowed in any de¬ 
partment unless they have been approved by the merchandise 
manager in charge of the department. Furthermore, nothing 
can be sold under the price marked on the tag. 

Mark-downs are generally estimated in the merchandise 
plan on the basis of the experience of previous years. The 
reason for this is that the percentage based on past experience 
is used to establish the correct percentage of mark-up which a 
department should show in order to cover the operating ex¬ 
penses and leave the desired percentage of net profit. Should 


STOCK KEEPING 


371 


the mark-downs for the current year exceed the estimated 
percentage, net profits will suffer proportionately. In order to 
maintain control over these mark-downs, it is very important 
that requisitions for mark-downs be approved by the proper 
authorities (such as the merchandise manager) before the 
buyer is allowed to change the prices. 

Figure 71 shows a convenient form for changing the retail 
price either up or down. These changes must be recorded in 
the statistical department. 


REPORT OF CHANGE IN RETAIL PRICE -- 4799 

M U INDICATES MARK UP 

•A O C- INDICATES MARK DOWN CANCELLATIONS | 

OO NOT REPORT CHANCES IN MORE THAN ONE DEPARTMENT ON EACH SHEET DATE. 109 

»»«»»--- 

REFERENCE 

ARTICLE 

F s °Slo E "*V 

SOLOFOR 

STASIS 


UNIT 

4°a 7 n« 


























































































































1 











_ 










REASON row CM.NGK OS MIC! 

.0.0. .......T 

AAA.O..O .. 






Fig. 71.—Form used for reporting change in price. 


Statistical Department Procedure.—The Statistical De¬ 
partment maintains the records covering invoices received, 
consignments, returns, transfers and mark-downs. It com¬ 
piles and makes the reports on orders placed, goods billed, 
merchandise received, open to buy and stock on hand in each 
department for the benefit of the merchandise office and those 
in charge of the various merchandising functions of the store. 

The mark-down reports are consecutively numbered, bound 
in pad form, in duplicate. Each buyer is supplied with a pad 
of these forms, upon which he lists the articles of merchandise 
upon which he desires to take a mark-down. It is then sent 
to the merchandise manager for approval. If approved, in the 
smaller stores, the buyer then changes the price tickets ac- 









































372 


THE MERCHANTS ’ MANUAL 


cordingly; or, in the larger stores, the mark-down report be¬ 
comes an order on the marking room to issue the required 
number of price tickets and make the changes. 

At the close of each day, these reports are sent to the statis¬ 
tical department for verification as to extension and entry 
against the department affected. The information to be 
recorded on the mark-down reports is self-explanatory. 

Transfers for merchandise should be recorded as charges 
against the stock of the department into which the merchan¬ 
dise is sent and credited to the department from which taken. 
Merchandise used for expense purpose should, of course, be 
charged to expense. The adjustments to stock records are 
made on the departmental merchandise stock record at the 
close of each accounting period. 


CHAPTER XXVII 


MARK-UP, PROFITS AND TURNOVER 

There are two elements in the determination of net profit: 

1. The percentage of realized markings or gross margin. 

2. The percentage of expense, or what is generally known as 
the cost of doing business. 

The first factor is controlled largely by competition. The 
second is partially out of the store’s control so far as fixed 
expenses are concerned, and dependent on careful management 
so far as controllable expenses are concerned. 

Proper control of turnover, the number of times the stock 
in question turns during a given period, has a vital effect in 
the control of net profits, as described later. 

The conclusions reached by Professor Secrist of Northwest¬ 
ern University in the extensive investigation made of the re¬ 
tail merchandising of clothing are worthy of attention. The 
following facts were brought to light in relation to costs, 
profits, and turnover: 

1. Actual amounts of expense in retail stores vary from 
store to store, from place to place, and from time to time. 
Stores of similar size and location, however, stand at a given 
time in about the same relative position one to the other as 
respects purchases, inventories, turnover, gross margins and 
expenses. That is, the group moves together in a more or less 
definite manner. 

2. The large as contrasted with the small store purchases 
less each year relative to its sales; it has smaller inventories 
at the close of the year relative to sales; it has more rapid 
turns, larger gross margins, larger expenses, smaller profits on 
sales, but larger profits on investments in merchandise. 

3. There are wide variations in the relation of purchases, 
inventories and expenses to sales, and in stock turnover in 

373 





374 


THE MERCHANTS ’ MANUAL 


stores of the same size. This suggests superior and inferior 
management. 

Mark-up.—The margin between cost price of merchandise 
and the marked price at retail is the amount which is necessary 
to take care of expenses, reductions, unavoidable shrinkages, 
and most important of all, profits. 

The percentage of mark-up, as determined by the Joint 
Commission of Inquiry, has not been, on the average, under 



1913 1916 1917 1918 1919 1920 1921 

Cost of merchandise. 53.71 63.14 73.78 90.11 106.72 122.49 97.60 

Margin. 27.51 31.96 38.80 44.76 46.86 58.79 48.57 

Percent. 33.9 33.6 34.5 33.2 30.5 32.4 33.2 

Selling price. 81.22 95.10 112.58 134.87 153.58 181.28 146.17 


Fig. 72.—Statistics showing mark-up, etc. 


30 per cent (see Figs. 72 and 73). It reached 34.5 per cent in 
1917. This percentage of mark-up is closely determined for 
individual stores by competition. Comparison shopping re¬ 
sults in keeping mark-ups to a general average since it is im¬ 
possible to maintain a store on a higher mark-up schedule 
than its competitors. 

There are two methods of figuring mark-up. The first is 
based on sales, the second on cost. Either method may be 
used but it is fatal to attempt figuring on the basis of both. 


































MARK-UP, PROFITS AND TURNOVER 


375 


For example, the following table shows differences in figuring 
percentages of profit on cost price and on retail price: 


Per Cent 
Profit on 
Cost 
Price 

Equals 

Per Cent 
Profit on 
Selling 
Price 

Per Cent 
Profit on 
Cost 
Price 

Equals 

Per Cent 
Profit on 
Selling 
Price 

20 


16.66 

46 


31.50 

21 


17.35 

47 


31.97 

22 


18.03 

48 


32.43 

23 


18.70 

49 


32.88 

24 


19.35 

50 


33.33 

25 


20 

52 


34.21 

26 


20.63 

54 


35.06 

27 


21.26 

56 


35.90 

28 


21.88 

58 


36.71 

29 


22.48 

60 


37.50 

30 


23.07 

62 


38.28 

31 


23.66 

64 


39.02 

32 


24.24 

68 


40.46 

S3H 


25 

70 


41.17 

34 


25.37 

75 


42.86 

35 


25.92 

80 


44.44 

36 


26.47 

85 


45.94 

37 


27 

90 


47.36 

38 


27.54 

95 


48.71 

39 


28.06 

100 


50 

40 


28.57 




41 


29.08 

Percentages other 

than those 

42 


29.57 

given can 

be closely approximated 

43 


30.07 

by reading between the lines. Thus 

44 


30.55 

82 per cent in cost would be about 

45 


31.03 

45 per cent on selling price. 


Figuring mark-up on sales is recognized as the most satis¬ 
factory method. The selling price is taken as 100 per cent. 
Cost of merchandise, cost of doing business, and net profit, 
must equal this 100 per cent. 

The following example shows how the retail method works 
in actual practice. 

Suppose an article costs $10. It is desired to find the 

correct selling price. Cost of doing business in this case is 25 








376 


THE MERCHANTS’ MANUAL 


per cent and a net profit of 5 per cent is desired. Therefore, 
100 per cent minus 25 per cent, the cost of doing business, and 
5 per cent, the net profit, is 70 per cent. This 70 per cent 
equals the cost of $10. 

70 per cent equals $10 

1 per cent equals 1/70 of $10 which is approximately $.143 
100 per cent equals 100 times $.143 which is $14.30 
The selling price, therefore, is $14.30 


Retailer’s 
Gross Margin 


Ret ailer'a. 
Cost of 

Mertiutadi'se 



Profit 



Oper 

iting Expens 

:s 


r 





m. 




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Cost of merchandise. . 

1913 

Cents. 

65.90 

1916 

Cents. 

66.40 

1917 

Cents. 

66.50 

1918 

Cents. 

66.80 

1919 

Cents. 

69.50 

Operating expenses... 

26.90 

26.30 

27.40 

27.30 

25.60 

Profit. 

7.20 

7.30 

6.10 

5.90 

4.90 

Total. 

100.00 

100.00 

100.00 

100.00 

100.00 


Fig. 73. — Consumer’s dollar spent for dry goods. 


1920 

Cents. 

67.60 

26.00 

6.40 


100.00 



Twenty-five per cent of the selling price which goes for cost 
of doing business is $3.58, while the 5 per cent profit is $.71. 

The cost method of mark-up bases everything on calling 
the cost price 100 per cent. Cost of doing business and net 
profit must be based on cost of merchandise, a point at which 
frequent errors are made. As Walter Engard says: 


The error usually comes from the fact that the merchant figures 
hi§ cost of doing business and the net profit as a percentage of sales. 





































MARK-UP , PROFITS AND TURNOVER 


377 


Then when figuring mark-up, he takes the cost of doing business 
per cent, as based on sales, adds to it the per cent of net profit as 
based on sales, and completely forgets that these figures are not 
based on the cost of merchandise as they should be. Therefore, the 
mark-up percentage is too small, for the sum figured as a percentage 
of the total sales always is smaller than the same sum figured as a 
percentage of the total cost of merchandise. 


In the department store it is necessary to figure out the 
proper mark-up in every department, and perhaps in several 
lines in that department. The mark-up must be correct. If 
it is too high, customers are driven away because of better 
prices elsewhere; if too low, profits are eaten up by expenses. 
The following figures (Dry Goods Reporter) give some index 
of mark-ups in various departments: 


Table VII. —Average Mark-up in Each Department of Ten Stores 


Store No. 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

Dress goods. 

33 

32 

55 

33 X 

35 

31 

33 

33M 

33H 

32 

Silks. 

35 

35 

A 

33 

A 

35 

39 

34 

35 

32 

Wash goods and linings.... 

35 

35 

32 

36 y 2 

34 

35 y 2 

36 

33 y 

33 

35 

Domestics, curtains, 

blankets. 

28 

26 H 

22 

23 y 2 

29 

28 

25 

25 y 2 

26 

26 

Drug sundries, jewelry, 
leather goods. 

38 y 8 

40 

38 

38 

33 

X 

38 y 2 

43 

36 

38 

Ribbons. 

40 

33 

34 y 

34 

30 

37 

34 

33 

33 H 

33 

Laces, embroideries, veilings, 
trimmings. 

40 

38 

38 H 

34 

37 

45 

37 

38 

41 

38 

Handkerchiefs. 

30 

33H 

33 

B 

36 

C 

32 

36 

31 

32 

Gloves and mittens. 

33 

35 

D 

37 

33 y 

33 

33 H 

30 y 

30 

35 

Hosiery. 

32 

31 

35 

33 

35 

33 

32 

34 

33 

33 

Knit underwear. 

35 

33 

30 

33 

32 

33 

33 

34 

32 

30 

Art goods. 

34 

40 

X 

X 

36 

31 

33 

32 

X 

35 

Coats, suits, skirts, dresses, 
blouses, sweaters, rain¬ 
coats, wash skirts. 

38 

38 

40 

35 

35 

36 H 

39 

35 

38 

37 

Corsets. 

50 

45 

E 

35 

33 Yt 

35 

39 

E 

E 

42 

Muslin underwear. 

36 

33 

30 

33 

34 

33 

37 

33 

33 y 2 

33 

Infants’ goods. 

38 

37 H 

F 

37 

35 

40 

35 

37 

F 

36 

Shoes. 

33 

32 

X 

X 

32 

X 

34 

32 

X 

32 

Clothing. 

35 

X 

X 

X 

36 

X 

35 

34 

X 

X 

Men’s furnishings. 

33 

35 

X 

X 

G 

X 

33 

G 

X 

X 


X Did not carry lines mentioned. 

A Silks were included with dress goods. 
B Handkerchiefs included with ribbons. 
C Handkerchiefs included with gloves. 


D Gloves included with hosiery. 

E Corsets included with ready-to-wear. 

F Infants' goods included with ready-to-wear. 
G Men's furnishings included with clothing. 











































378 


THE MERCHANTS ’ MANUAL 


These figures represent the actual percentage of added dol¬ 
lars and cents between the invoice price and the marked re¬ 
tail price appearing on the tags, representing cost of doing 
business, theft, shrinkages in measures, and mark-downs. 

The Cost of Doing Business.—The cost of doing business 
is the total of all items of expense. Payroll is inevitably the 
largest item of expense, but cost of doing business includes 
money spent for supplies and postage, insurance, advertising, 
rent, interest on capital borrowed, and also on capital invested. 
It does not include inward transportation charges or any spe¬ 
cial luxury taxes which are included in the cost of the mer¬ 
chandise. 

The following table shows the operating expenses for 340 
department stores as tabulated by the Harvard Bureau of 


Business Research with the cooperation of the National Retail 
Dry Goods Association: 

Table VIII.— Operating Expenses in Department Stores in 1922— 
340 Firms 

Net Sales = 100 Per Cent 


Common Figure 
(Per Cent) 

Salaries and Wages. 

14.9 

Rentals. 

2.3 

Advertising. 

2.1 

Taxes (Except on Buildings, Income, and Profits) 
Interest (On Capital—Borrowed and on Capital— 
Owned). 

0.7 

2.6 

Supplies. 

0.6 

Service Purchased (Heat, Light, Power, Delivery).... 
Unclassified. 

0.7 

1.0 

Travelling. 

0.4 

Communication'. 

0.2 

Repairs. 

0.2 

Insurance. 

0.5 

Depreciation—Losses from Bad Debts. 

0.3 

Other Depreciation. 

0.5 

Professional Services. 

0.1 

Total Expense. 

27.1 





















MARK-UP, PROFITS AND TURNOVER 


379 


Salaries and wages include those paid to executives, to sell¬ 
ing departments, and to non-selling departments. In a sepa¬ 
rate analysis of 87 stores, the distribution of salaries and 
wages was found to be as follows: 


Table IX. —Salaries and Wages in Department Stores in 1922— 
87 Firms 

Net Sales = 100 Per Cent 



Common Figure 
(Per Cent) 

Administrative and General—Executive. 

1.4 

Other Administrative. . . 
Office. 

0.4 

1.4 

Occupancy. 

0.9 

Publicity. 

0.4 

Buying . 

2.2 

Receiving Marking and Stock Room. 

0.3 

Inside Selling—Direct. 

6.0 

Managers and Assistants. 

0.7 

Indirect Selling.. 

1.1 

Delivery . 

0.6 

Total Salaries and Wages . 

15.4 



Rentals include amounts paid for rent of store, warehouse, 
and garage or stable. If the store owns any of these, a fair 
charge should be made. In the investigation twelve firms 
report rentals over 5 per cent of net sales. A large number 
grouped around 4 per cent, while the largest concentration 
was around 1.7 per cent of net sales. 

Advertising includes expense for advertising space of all 
kinds, and also signs, catalogues, circulars, novelties, and dis¬ 
plays. For a large group of firms, the advertising expense was 
less than two per cent. 

Taxes cover city, county and state taxes on merchandise, 
equipment and capital stock. 

Interest includes interest on capital borrowed and also net 
investment in the business exclusive of real estate. It is inter- 

















380 


THE MERCHANTS' MANUAL 


esting to note that in the investigation the figures for total 
interest varied inversely with the rate of stock-turn. 

Owing to the great variation in the size of department 
stores, and the consequent fluctuation in operating expenses, 
the following table was prepared according to the volume of 
sales in 1922: 

Table X.— Operating Expenses, Gross Margin, Net Profit, and 
Stock-turn in 1922 in Department Stores with Net Sales 
OF $1,000,000 AND OVER ACCORDING TO VOLUME OF SALES 

Net Sales = 100 Per Cent 


Items of Expense 

$1,000,000- 
$3,999,000 
(108 firms) 

$4,000,000- 
$9,999,000 
(29 firms)] 

$10,000,000 
and over 
(14 firms) 

Salaries and Wages. 

15.4% 

15.4% 

15.3% 

Rentals. 

2.7 

3.2 

3.5 

Advertising. 

2.9 

2.9 

3.2 

Taxes. 

0.5 

0.4 

0.4 

Interest. 

2.1 

2.0 

1.9 

Supplies. 

0.9 

1.4 

1.2 

Service Purchased. 

0.7 

0.4 

0.6 

Unclassified. 

1.1 

1.1 

1.0 

Traveling. 

0.4 

0.4 

0.4 

Communication. 

0.2 

0.3 

0.2 

Repairs. 

0.2 

0.3 

0.4 

Insurance. 

0.4 

0.3 

0.3 

Depreciation: 

Losses from Bad Debts. 

0.2 

0.2 

0.3 

Other Depreciation. 

0.6 

0.5 

0.6 

Professional. 

0.1 

0.2 

0.2 

Total Expense. 

28.4 

29.0 

29.5 


The common figure for salaries and wages was lowest for 
the firms with small volume of sales. The same is true of 
rentals and advertising. Taxes and interest, however, showed 
the opposite result. 

Profits.—Gross margin is defined as the difference between 
net sales and the cost of merchandise sold, and represents the 
realization of the actual mark-up. From this the net profit 
must be secured after all expenditures have been met. Where 

























MARK-UP, PROFITS AND TURNOVER 381 

the total expenses exceed the gross margin the result is a net 
loss. 

In 1921 the Harvard Bureau of Business Research found 
that the common figure for gross margin was 28.7 per cent 
of net sales. While there was some fluctuation, the majority 
of reports centered round this figure. 

The common figure for net profits was 0.9 per cent of net 
sales for 1921, the stores with the smallest volume of sales 
showing a loss while the larger stores made a small profit. 

Gross margin, as one store official says, is determined by 
two things—competition which holds it down and unavoidable 
expense which holds it up. If a store can underbuy or can 
cut down the cost of doing business, it can increase its margin 
of profit. 

Suppose the ordinary store's cost of doing business is 25 
per cent. Suppose, furthermore, that five per cent is charged 
for reductions. Then the difference between this and the 
price which can be got for the merchandise will be the profit. 
How much the store makes depends on the turnover. If the 
mark-up can be kept down and the turnover up, the profits 
will be reasonably certain to follow. 

Turnover.—Turnover is a term glibly used and often mis¬ 
understood. Nevertheless, it is one of the vital factors in 
merchandising, particularly so in its relation to merchandise 
control and the resultant effect on profits. 

Turnover in its ordinary application means turnover of 
stock and not of capital. The rate of turnover equals the 
number of times the stock turns during a given period, which 
is usually a year, but which may be a shorter period. 

The failure of most people to understand turnover lies in 
its application. What may be an excellent rate of turnover 
for one product may not be for another. The first thing 
necessary to grasp about turnover is that it is different for 
almost every line of business. Furthermore, it is different for 
stores in the same line of business because turnover and its 
rate is made up of all the things which go towards merchandis¬ 
ing effectiveness. 

Table XI shows the highest, lowest, and average rate of 
turnover in department stores in twelve important lines 
grouped by Federal Reserve Districts, and tabulated by the 


Table XI.—Rates of Department Store Turnover 


382 


THE MERCHANTS 1 MANUAL 


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Table XI.—Rates of Department Store 


MARK-UP , PROFITS AND TURNOVER 


No. 12 

3.21 

.97 

2.14 

3.39 

1.00 

2.13 

5.21 

.61 

2.60 

3.70 

.74 

1.81 

6.50 

1.10 

2.21 

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2.85 

1.50 

2.18 

3.90 

2.16 

3.10 

2.43 

.89 

1.90 

3.90 

1.41 

2.67 

3.30 

3.30 

No. 10 

2.90 
.80 

1.71 

2.65 

1.10 

1.92 

3.90 

1.03 

1.90 

2.80 

.96 

1.50 

1.30 

1.30 

No. 9 

2.46 

1.12 

1.65 

3.94 
1.50 
2.30 

6.62 

1.28 

2.20 

1.94 

1.94 

4.37 

1.15 

2.48 

No. 8 

2.02 

.78 

1.50 

4.43 

.94 

1.81 

4.95 

.94 

1.76 

3.41 

.49 

1.70 

2.14 

2.14 

No. 7 

5.60 

1.02 

2.25 

3.98 

1.14 

2.23 

5.00 

.76 

2.32 

3.53 

.94 

2.07 

3.48 

.60 

1.83 

No. 6 

3.13 

1.83 

2.56 

3.43 

1.18 

2.18 

4.00 

1.27 

2.32 

2.73 

1.31 

2.10 

2.80 

1.15 

1.88 

No. 5 

5.26 

1.30 
2.61 

3.10 

1.20 

2.27 

4.92 

1.53 

2.60 

2.50 

1.16 

1.98 

3.30 
.80 

2.05 

No. 4 

4.09 

1.00 

2.20 

2.69 
.83 

1.70 

7.10 

.78 

1.85 

3.25 

.50 

1.80 

3.21 

.70 

1.87 

No. 3 

4.00 

1.20 

2.07 

7.00 

.90 

1.83 

4.00 

1.10 

2.00 

4.00 

3.00 

3.50 

4.40 

.84 

1.93 

No. 2 

6.69 

1.40 
2.45 

4.41 

.80 

2.32 

5.43 

1.08 

2.63 

3.50 

.60 

1.90 

4.19 

.60 

2.33 

No. 1 

4.54 

1.14 

2.63 

9.52 

1.57 

2.64 

5.29 

1.10 

2.40 

4.50 

.77 

2.88 

3.46 

1.21 

2.27 


Women’s Shoes 

Highest. 

Lowest. 

Average. 

House Furnishings 

Highest. 

Lowest. 

Average. 

Domestic Rugs 

Highest. 

Lowest. 

Average. 

Art Wares 

Highest. 

Lowest. 

Average. 

Furniture 

Highest. 

Lowest..«. 

Average. 


383 


This tabulation shows the highest, lowest and average rate of turnover in twelve important lines reported by representative department stores in the 
United States, grouped by Federal Reserve Districts. The figures afford the merchant a basis of comparison with the turnover statistics of his own store. 
Of course, the retailer whose store is consistently below the average as shown above cannot afford to feel satisfied with its past performances. There is 
a wealth of significance in these figures for those who read them right. 


















































384 


THE MERCHANTS’ MANUAL 


Controllers’ Congress. The variations between different items 
and even between the same items are surprisingly great. 

T. L. Blanke, director of the Controllers’ Congress of the 
National Retail Dry Goods Association, says turnover figures 
should be figured monthly, or even weekly, or daily. This 
is not at all difficult provided the store operates under the 
retail inventory method. Annual turnover figures are worth 


25 — -25 



Fig. 74.—Chart showing differences in rate of turnover in different districts. 

little because they come too late to correct errors in buying, 
and are taken when the stocks are low, consequently not 
representing average or normal conditions. The results are, 
therefore, distorted and the figures misleading. 

Figure 74 shows graphically the differences in turnover 
existing in three Federal Reserve Districts in a selected group 
of articles sold in department stores. 




























































MARK-UP, PROFITS AND TURNOVER 


385 


Character of the Goods.—In all discussion of turnover 
the type of goods in question is all-important. Roughly 
speaking, all articles may be divided into luxuries and neces¬ 
sities, in accordance with the nature of the demand. 

The demand for pure necessities—for matches, for salt, for 
those things without which life would be impossible, exceed¬ 
ingly difficult or even unpleasant—is essentially inelastic. 
That is, by cutting the price the consumption is not materially 
increased. In a grocers’ cut price war the demand is not 
increased nor is the consumption increased. The one who 
sells at the lowest price gets trade from the others. Cutting 
prices is essentially unprofitable because nothing is gained in 
the way of increased markets and added clientele. 

The demand for the pure luxury is elastic. The market 
is increased in direct proportion as the price is lowered. Cut¬ 
ting prices on luxuries does increase trade. Each successive 
cut brings the product within reach of a new group of potential 
customers. 

For every type of article, whether necessity or luxury, there 
is a rate of turnover which may be termed “average.” Each 
store learns these rates and on them charges the percentage 
of profit. If the mark-up is below the normal it is reasonable 
to expect that the turnover will increase, provided the nature 
of the demand has been estimated correctly. 

Regularity of demand is another potent factor in turnover. 
It seems to be true that the more staple the article, that is, 
the more necessary it is, the larger the rate of turnover. In 
candy it is very rapid; in cut glass it is very slow. The fol¬ 
lowing table shows annual turnover in certain departments, 
based on figures obtained by the National Retail Dry Goods 
Association (Table XII). 

Number of Lines. —Too many price lines reduce turnover 
immediately. By concentrating on one line, less stock, a 
bigger and better assortment and more merchandising effi¬ 
ciency are obtained. It is one of the secrets of chain store 
success to pick the best sellers and concentrate. 

Concentrating on price lines does not mean an incomplete 
stock. It does mean limiting stock to those articles which are 
in constant demand by the public, Above all, it is necessary 

25 


Table XII.— Report on Merchandise Stock Turnover for the Year 1921, and First Six Months of 1S22 Showing 

\T_ m m j 


386 


THE MERCHANTS’ MANUAL 


























































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THE MERCHANTS’ MANUAL 


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Table XII. —Report on Merchandise Stock Turnover for the Year 1921, and First Six Months of 1922, Showing 

Number of Times Turned.— Continued 


390 


THE MERCHANTS' MANUAL 





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MARK-UP , PROFITS AND TURNOVER 


391 


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392 


THE MERCHANTS' MANUAL 


not to lose sales, but if there is no call for an article it is 
foolish to put it in stock merely to have a complete line. 

The number of lines, therefore, should correspond to the 
demand, which will be more or less determined by store policy. 

National Advertising. —National advertising does create 
demand, and is admittedly a factor in the problem of turn¬ 
over. It frees the store of much of the necessity of publicity 
for certain articles by carrying a nationally advertised line. 
It does not, however, allow the manufacturer to raise the 
price beyond the intrinsic value of the article sold. Depart¬ 
ment stores have constantly held out for the privilege of sell¬ 
ing articles which they buy for the price they think they are 
worth. That is, national advertising cannot create demand 
for articles unless the merchandise back of it is worth the 
price asked. 

National advertising does have a very vital effect on turn¬ 
over because it can increase certain well-known lines. Conse¬ 
quently, exclusive agencies for such lines may prove very 
valuable concessions. 

Local Advertising. —One, if not the most important, effect 
of local advertising by the store is to increase turnover. This 
subject is treated fully in the following chapter. 

Overloading. —Control of turnover means doing away with 
one of the worst inefficiencies still existing in retail mer¬ 
chandising. As Congressman Sydney Anderson, chairman of 
the former Congressional Joint Commission of Agricultural 
Inquiry in the Commission’s report on distribution, says: 

One of the outstanding defects shown by tables of distribution is 
the retailer’s failure to purchase stock in a manner that will provide 
a steady, even flow of merchandise to the consumer without accumu¬ 
lation of surplus stock, which ties up capital and credit and adds to 
his cost of operation. One of the factors of waste in distribution is 
in idle merchandise stock on the shelves of the retailers and the 
warehouses of the wholesalers. When this burden is permitted to 
develop, it must be passed along to the consumer if the retailer 
remains in business. 

In particular, overstocking by retailers represents over-stimulation 
and over-selling by manufacturers and wholesalers. It also repre¬ 
sents in part the dealer’s desire to secure quantity discount in the 
belief that he can more successfully meet competition by underselling 


MARK-UP , PROFITS AND TURNOVER 


393 


competitors. In order to do this, however, he must dispose of mer¬ 
chandise in reasonable time or lose the earning value his capital 
would have if it were more rapidly turned. 

Figure 75 shows the retail dry goods stock turn from 1913 
to 1920 as prepared by the Joint Commission of Agricultural 
Inquiry. It is designed to show: 

1. Gross margins received, that is, the difference between 
the selling price and the cost of the merchandise. 

1913 1916 1917 1918 1919 1930 

100 * 

90 * 

80 * 

70 * 

60 * 

50 * 

40 * 

30 * 

20 * 

10 * 

0 * 

Fig. 75.—Chart of dry goods stock turn. 

2. The cost of the merchandise delivered at the retailer’s 
door. 

3. The amount of stock investment. 

4. The stock turn figured, that is, number of times mer¬ 
chandise stock is turned per year. 



Selling Pi 

ice of Me 

rchandise 


Gros 

>3.87 

Margin i 

33.6 

n Percent 

34.46 

t ige By Ye 

33.19 

ars 

30.51 32.41 






Cost 

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ber Times 
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2.56 

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2.64 

Year 

3.44 3.22 

[2S" 



























394 


THE MERCHANTS’ MANUAL 


5. Amount of stock investment which would have been 
required to maintain stock equal to the highest frequency 
shown during the period covered by this investigation. 

To all practical intents this chart shows to what extent 
stores are inclined to overload whether through desire to take 
advantage of quantity discount or free deals. 

Increasing Turnover.—Increasing turnover means quicker 
sales. It may be brought about in either of the following two 
ways: 

1. The first method is to reduce the stock carried and main¬ 
tain or increase the sales volume. That is, if the volume is 
maintained, the same profit is made from a smaller invest¬ 
ment. If $10,000 is invested in stock which turns twice dur¬ 
ing the year, it is not so good as though $5,000 were invested 
in stock which turns four times a year. In the second case, 
the same profit is made on $5,000 as was formerly made on 
$10,000. The most frequent cause for such a condition is 
overloading. The merchant with an ill-balanced stock is in a 
bad condition because he has money uselessly tied up which 
otherwise might be working for him. Stock control is essen¬ 
tial for speed in turnover, and stock control can only be 
obtained by an adequate inventory system. 

If the sales volume is increased while, at the same time, the 
stock carried is decreased, there is a larger profit from a 
smaller investment. 

2. The second method is to increase the volume of sales in 
proportion to the stock carried. 

Sales volume may be increased by: 

a. Using better merchandising methods. 

b. Cutting prices. 

The aim of every progressive merchant is to install better 
merchandising methods, to use advertising, to train the sales- 
force, etc. It is a sound and permanent method of building 
up good will and enlarging the number of store customers. 

Cutting prices is also a legitimate method of increasing 
turnover provided it takes place under certain conditions. 

The question of the loss leader or the staple article featured 
at a cut price to attract sales cannot properly be discussed 
under turnover. The factors entering into such questions are 


MARK-UP , PROFITS AND TURNOVER 395 

more complex. Against any actual loss from the increased 
turnover in the staple advertised article, it is necessary to set 
off the increased turnover in some slower moving and higher 
priced article due to the price bait of the loss leader. 

Increased turnover, to sum up, may bring more profits, 
when rightly handled, in the following ways: 

1. Same profit from smaller investment. 

2. Larger profit from same investment. 

3. Larger profit from larger investment. 

That is, the increase in turnover means a decrease in pro¬ 
portion of capital invested and profits. 

Losses Due to Slow Turnover.—The Chamber of Com¬ 
merce of the United States has spent much time, through the 
Domestic Distribution Department, in studying merchandise 
turnover, and has tabulated carefully the elements in which 
losses due to slow turnovers may be found. It concludes as 
follows: 

1. Investment. Invested money is the source of profit 
which in turn depends upon the amount of goods in stock and 
upon the length of time which these goods are carried. It is 
evident that to double the turnover comes to the same thing as 
doubling the amount of stock without increasing the invest¬ 
ment. Or, vice versa, one-half as many turnovers results in 
doubling the amount of money invested for the same quantity 
of goods. 

2. Interest. Interest must be paid upon all borrowed money 
and most merchants are borrowers. If the turnover is re¬ 
duced from a period of six months to one of three months, the 
interest on a given loan is reduced in the same proportion. 

3. Mark-down. Mark-downs are required for three princi¬ 
pal reasons: 

a. The goods have proved unsalable at the original mark-up. 

b. Too many were bought and a change in the style or sea¬ 
son has left some of them on the shelves— 

c. With the result that they have been soiled, chipped, bent, 
or defaced otherwise by frequent handling. 

4. Salaries and wages. Salaries and wages must be in¬ 
cluded because every operation in every establishment costs 


395 


THE MERCHANTS’ MANUAL 


something. When an unprofitable operation is performed it 
represents a loss. Roughly these losses are due to: 

a. Waste of time by management in reaching decisions as 
to when and what mark-downs are to take place. 

b. Waste of time by sales force. 

c. Re-writing tickets. 

d. Rearranging goods for mark-down sales. 

5. Shelf or storage room. Shelf or storage room is a definite 
part of the expense of doing business; and that portion which 
is devoted to slow-selling merchandise is wasted. 

6. Prestige-reputation. Prestige for the high character or 
timeliness of merchandise is sought by most stores. There is 
a distinct waste measurable in dollars and cents when the 
reputation of an establishment is lowered by unstylish or 
shopworn goods. 

7. Inefficiency. Inefficiency always results in waste. The 
buyer whose judgment often is wrong usually makes the mis¬ 
takes from lack of knowledge as to the stock and the speed 
or slowness with which it is moving. Frequent mistakes cause 
uncertainty in the mind of the one who makes them and tend 
to worse errors as time goes on unless some measures are taken 
to make them improbable. 

Calculating Turnover.—Stock turnover may be calculated 
by either of the following two methods: 

1. By dividing the average inventory at retail for the period 
under consideration into the sales for the same period. 

2. By dividing the average inventory at cost into the cost 
of sales. 

The first, or so-called retail method, is endorsed by the Con¬ 
trollers’ Congress of the National Retail Dry Goods Associa¬ 
tion. 

The average inventory is obtained by adding together the 
total amounts of all inventories recorded, including the initial 
inventory, and dividing the figure resulting by the number of 
inventories recorded. If inventories are taken weekly, the 
annual inventory would be obtained by adding together initial 
inventory and weekly inventories, and dividing by fifty-three. 
If inventories are taken monthly, the initial and monthly 
inventories would be added together and divided by thirteen. 

Generally speaking, the greater the turnover, the less the 


MARK-UP , PROFITS AND TURNOVER 


397 


total expense and the greater the net profit. This is evidenced 
by the figures compiled by the Harvard Bureau of Business 
Research, for 1922: 


Table XIII. —Operating Expenses, Gross Margin, and Net Profit in 
1922 in Department Stores with Net Sales of $1,000,000 

AND OVER, ACCORDING TO RATE OF STOCK-TURN 

Net Sales = 100 Per Cent 


Items of Expense 

Stock-turn less 
than 3 times 
(49 firms) 

3-3.9 
times 
(43 firms) 

4 times 
and over 
(57 firms) 

Salaries and Wages. 

16.0% 

15.3% 

14.9% 

Rentals. 

3.2 

2.5 

2.9 

Advertising. 

2.9 

3.0 

2.8 

Taxes. 

0.7 

0.5 

0.4 

Interest. 

2.7 

2.1 

1.7 

Supplies. 

1.1 

1.0 

0.9 

Service Purchased. 

0.7 

0.6 

0.6 

Unclassified. 

1.1 

1.0 

1.1 

Traveling. 

0.4 

0.3 

0.4 

Communication. 

0.2 

0.3 

0.2 

Repairs. 

0.2 

0.2 

0.3 

Insurance. 

0.4 

0.4 

0.3 

Depreciation: 

Losses from Bad Debts. 

0.2 

0.2 

0.2 

Other Depreciation. 

0.7 

0.6 

0.5 

Professional Services. 

0.2 

0.1 

0.1 

Total Expense. 

30.7 

28.1 

27.3 

Gross Margin. 

32.7 

31.5 

31.8 

Net Profit. 

2.0 

3.4 

4.5 


This seems to indicate that the net profit increases with the 
turnover while the total expense decreases. This conclusion 
is made clear by the results of the Harvard computation that 
department stores in 1922 made a profit of 0.9 per cent of net 
sales, compared with average loss of 1.9 per cent in the retail 
shoe trade, 6.6 per cent in the retail jewelry trade, and 1.9 in 
the wholesale grocery trade. The report goes on to say: 

Of these four trades, the department stores were the only group 
that showed an average net profit, even though small, for the year 
1921. This apparently was due, in large measure, to the fact that 
the department stores showed an average increase in volume of sales, 
whereas in the other trades there was an average decrease in the 
volume of sales in 1921 as compared with 1920. 



























CHAPTER XXVIII 


ADVERTISING 

Successful advertising by retail stores is usually conducted 
according to careful policy determined, by the character of 
the business. If the store carries lower-priced merchandise, 
the advertising policy naturally will be to advertise in those 
media which reach the masses, and the copy must be written 
with popular likes and dislikes in view. If the store sells on a 
quality basis, the advertising naturally will conform in make¬ 
up and media used. If, however, the store sells to all classes 
of people, the advertising will be less individual than the 
quality advertising and less sensational than the mass adver¬ 
tising. 

The Advertising Department. —The ordinary retail store 
prepares its own advertising. The department store, the dry 
goods store, the clothing store, and the shoe store all advertise 
in newspapers. The larger establishments have very complete 
and efficient advertising departments. Figure 76 shows the 
organization of the publicity department in Halle Brothers 
Company, Cleveland. This is typical of the larger stores, all 
publicity activities being centralized under the advertising 
manager. 

A large part of the advertising department’s success is de¬ 
termined by the degree of cooperation between the advertis¬ 
ing manager and the buyer. Only through coordination can 
the knowledge of the goods possessed by the buyer receive 
adequate treatment by the advertising knowledge of the ad¬ 
vertising manager. Frequently the buyer will wish to have 
the advertising department sell goods which are not suited to 
the demand. Such a situation requires tactful handling. Al¬ 
though, in general, the buyer is supposed to furnish selling 
ideas, the actual help received varies greatly with the individ¬ 
ual buyer. Some will go so far as to write the copy and lay 
out the advertisement. Others will merely tell the advertising 

398 


ADVERTISING 


399 


manager what they consider the salient points of the mer¬ 
chandise to be sold and from his general merchandising knowl¬ 
edge he will prepare the advertising. 

Many stores take the stand that the advertising department 
should decide not only as to how things are advertised, but as 
to what is advertised. Since what is advertised is the most 
important thing in any advertisement, the choice may be 
made an advertising department function. 



Fig. 76.—Organization of a publicity department. 


Reducing the operation of the advertising department to a 
standard system is exceedingly important. There is no other 
way of placing responsibility. Gimbel Brothers, New York, 
on the back of the copy form used by buyers, has printed the 
following instructions: 

1. All data for advertising must be furnished to the Adver¬ 
tising Bureau in written form, using only the regulation pink 
advertising copy sheets, of which this is one. In addition, 
however, you may confer with the Advertising Director or 
Writers concerning the interest features of any advertising 
matter. 

2. When goods are reduced, GimbePs former prices must 
be stated and reasons for the reductions. 































400 


THE MERCHANTS' MANUAL 


3. In case of “special purchase” merchandise, give in detail 
the actual facts of the purchase and the average (but con¬ 
servative) selling prices elsewhere. 

4. The quoting of comparative values is to be avoided, ex¬ 
cept in positively verified instances always subject to omission 
by the Advertising Bureau. 

5. The policy of Gimbel’s is to fill mail, telephone, and 
C.O.D. orders. If for any legitimate reason you cannot do 
so, state reason—the item being subject to rejection by the 
Advertising Bureau. 

6. All requests for advertising must be signed by the Buyer 
or Assistant Buyer. 

In this store advertisements are checked against goods on 
sale and it is ascertained in this way whether merchandise is 
exactly as advertised. 

Advertising Appropriations.—The question of how much 

should be set aside for advertising purposes is always impor¬ 
tant. Conditions vary and hard and fast rules are fatal. The 
department store in a small community may spend 2 per 
cent of its rate volume and upwards for advertising. The 
successful store may spend 3 per cent. The store which is 
not making money may have to spend as high as 10 per cent 
to secure an adequate volume of sales on which profits may 
be secured. A new store will also find it necessary to increase 
its appropriation temporarily until the needed volume is 
obtained. 

S. L. Silverstein, of the Rosenbaum Company, Pittsburgh, 
estimates that the average department store budget for ad¬ 
vertising will approximate 2Vi> per cent for the entire store. 
Supposing that each department is operating successfully, 
Table XIV shows the percentage of sales to be used in adver¬ 
tising under normal conditions. 

A successfully operating department not only makes money 
but shows a reasonable, steady increase in volume of business. 
If a department is not operating satisfactorily, it is first neces¬ 
sary to figure out the volume of business required to put it on 
a paying basis. By deducting the amount of business already 
done from the amount it is necessary to do in order to make a 
profit, the amount of increase to be secured is determined. Mr. 


ADVERTISING 


401 


Table XIV. —Percentage of Sales Used in Advertising 


Yard Goods and Accessories 

Dress Accessories 


Per Cent 

Veilings. 


Silks and Velvets. 

iy 2 

Handkerchiefs . 


Dress Goods. 

2 

Women’s Neckwear. 

. 2y a 

Wash Goods. 

2 

Gloves. 


Laces and Embroideries. 

iy 2 

Hosiery. 


Ribbons. 

iy 2 

Knit Underwear (Cotton).. 

. 2 

Trimmings. 

iy 2 

Knit Underwear (Silk). 

. 3 

Notions and Dressmakers’ 


Parasols and Umbrellas.... 

. 2 

Supplies. 

1 

Jewelry. 

. 3 

Women’s and Children’s 

Hair Goods. 

. 4 

Ready-to-Wear 


Leather Goods. 

. 3 

Women’s and Misses’ Suits.. 

3 

Toilet Articles. 

. 2 

Women’s Dresses. 

3 

Household Lines 


Girls’ Apparel. 

3y 2 

Furniture. 

. 5 

Women’s and Misses’ Coats.. 

2 

Linens. 

. 1 % 

Shoes. 

2y 2 

Carpets and Rugs. 

. 3 

Waists. 

3 

Blankets, Bedding, etc. 

. 3 

Separate Skirts. 

3 

Lace Curtains. 

. 2y 2 

Millinery (in season). 

2y 2 

Art Needlework. 

. iy 2 

Petticoats. 

2y 2 

Silverware. 

. 3 

Lingerie. 

3 

Men’s and Boys’ Apparel 

Infants’ Wear. 

2y 2 

Men’s Clothing. 

. 5 

Corsets. 

2 

Boys’ Clothing. 

. 4 

Furs (in season). 

3 

Men’s Shoes. 

Men’s Furnishings. 

Men’s Hats. 

. 3 
. 2y 2 

. 4 

Silverstein recommends in 

such 

a case that an additional ad- 

vertising appropriation should be made on a percentage basis 


of approximately double the department’s regular advertising 
percentage. For example, a glove department which is suc¬ 
cessful should be given an advertising appropriation of IV 2 
per cent. However, if it were unsuccessful and doing a volume 
of business of $50,000, and it is essential to do a $75,000 busi¬ 
ness to be successful, an increase of $25,000 is necessary. 
Therefore, at least 3 per cent of $25,000 and l 1 /^ per cent of 
$50,000 should be appropriated for the advertising in this 
department. 

In the schedule given above the percentages average 2 % 
per cent. Since there are always some departments which do 
not advertise, the average will be within the 2% per cent limit. 

When certain departments are used mainly to draw people 
26 











































402 


THE MERCHANTS’ MANUAL 


to the store, the advertising percentage for those particular 
departments may be increased considerably. 

The survey of the retail clothing business by the North¬ 
western University School of Commerce in cooperation with 
the National Association of Retail Clothiers revealed some 
interesting tendencies in advertising expenditures. Among 
other conclusions are the following: 

1. The amount spent for advertising increased noticeably 
with the increased size of the store, this being true not only 
for a varying number of stores, but also for the identical stores 
for each of the years. 

2. The amount spent for advertising increases with the size 
of the city, that is, the larger the city the larger amount of 
advertising expenditure. 

3. The larger stores increased their advertising expendi¬ 
tures more while business was growing than did the smaller 
stores in the smaller towns. 

Control. —There are many systems of control in use. One 
of the simplest to use is that devised by W. R. Hotchkin, 
formerly advertising manager for Abraham and Straus. As 
described in Printers’ Ink, only three charts are needed for the 
correct operation of the plan. Figure 77 lists on the left-hand 
side the various departments. The next column contains 
figures indicating the average percentage of the total annual 
appropriation given each department for a period of three or 
five years. Such statistics are extremely useful in arriving at 
the proper figure for the current year. 

In the column headed “current month” is set down the per¬ 
centage of the monthly appropriation scheduled for the cur¬ 
rent month for each department. The last column, headed 
“current month in dollars and cents,” contains the actual 
amount to be expended. If the percentage for carpets and 
rugs is 3 per cent and the total appropriation for the store is 
$120,000, then the monthly allowance for rugs and carpets will 
be 3 per cent of $10,000, or $300. 

This system plans the whole appropriation a year in 
advance, but departmental budgets are estimated only a month 
in advance to allow for flexibility. An emergency fund is 
maintained at all times. Thus the actual monthly expenditure 


ADVERTISING 


403 


Department 

Five- or 
Three-Year 
Average 

Current 

Month 

Current Month 
in Dollars 
and Cents 

Art Needlework 




Bedding 

• 



Books 




Cameras 




Candy 




Carpets, Rugs 




China and Glass 




Clothing—Boys’ 




Clothing—Men’s 




Corsets 




Domestics 




Draperies 





Fig. 77.— Advertising appropriation system, P. I., Apr. 27, 1922. 


Department 

Appro¬ 

priation 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

Art Needlework 

















Bedding 

















Books 

















Cameras 

















Candy 

















Carpets, Rugs 

















China and Glass 

















Clothing—Boys’ 

















Clothing—Men’s 











— 

— 

— 

— 

— 

— 

Corsets 











Domestics 














— 

— 

— 

Draperies 















Fig. 78.—Control of expenditures. 


































































404 


THE MERCHANTS’ MANUAL 


would be somewhat less than the 3 per cent for rugs and 
carpets in order to keep this reserve fund intact. 

Figure 78 gives an exact account of all expenditures for 
advertising for each department. The departments are listed 
alphabetichlly on the left-hand side. In the next column is 
the amount of money each department has been granted for 
the current month. In the rest of the spaces is set down daily 
the amount of money expended for the department. In this 
way it is possible to know at any moment during the month 
just how much of the appropriation remains for any particular 
department. 

The third form used in this system is similar to Fig. 78 
except that the column headed Appropriations is omitted. It 
serves as an automatic reminder and check-up on departments 
to be advertised each day. One month in advance the adver¬ 
tising manager decides on departments to be featured and 
marks a circle or other mark in the squares representing the 
days every department is due for advertising. 

Checking-up Results of Advertising.—It is difficult to 
estimate the particular value of a specific advertisement. 
While it may be possible to assign certain figures to a par¬ 
ticular advertisement, it is impossible to set a valuation on 
the cumulative benefit to the store in good will through the 
advertisement. 

One large Western store requires a report from department 
managers on the day following the insertion of an advertise¬ 
ment as the only method of checking up results. The depart¬ 
ment manager is supposed to estimate the amount of business 
due directly to the influence of the advertisement. 

One method frequently used to compare the effectiveness of 
various papers is what is called the “coupon” advertisement. 
An annual test of this kind is made by Crowley, Milner and 
Company, Detroit. A full page of coupons is printed, each 
offering some article at a certain price. The coupons are 
keyed with the name of the paper, and customers taking 
advantage of the sale are obliged to present the coupon in 
order to secure the merchandise. At the end of the day's 
business, the coupons are counted to see which newspaper 
“pulled” best. 


ADVERTISING 


405 


The attempt has also been made to key results of outdoor 
advertising by featuring a certain article not advertised in 
any other way. 

The Test of Advertising. —The ultimate measure of value 
of all advertising is the actual amount of sales brought about 
for the store either directly or indirectly. The methods by 
which this result is obtained vary from the purely institutional 
advertising aimed at building up good will to the purely price 
advertising aimed to sell specific goods. But there are certain 
tests which may be applied to the completed advertisement 
which will, as a rule, give some index of the value of the 
advertisement. According to John Lee Mahin, a leading expert 
on consumer advertising, these tests should show whether the 
advertisement is: 

1. Institutional. 

2. Natural. 

3. Specific. 

4. Timely. 

5. Pertinent. 

6. Consistent with character of medium, etc. 

7. Persistent, forming part of an organized plan. 

8. Authoritative. 

9. Plausible, so that people will believe what is written. 

10. Clearly expressed. 

The advertising policy of the store will, perhaps, add other 
tests to those above enumerated. In any event, the store’s 
advertisements should be measured according to a certain 
standard. 

Institutional Advertising. —The department store may or 
may not be an institution. Many of them are. Any store, 
however, which builds around an idea or an ideal has the 
opportunity for becoming an institution. Institutional adver¬ 
tising creates a following, causes belief in the store, builds 
good will, and formulates the store policy in the minds of the 
public. 

The policy of R. H. Macy and Company (see Fig. 79) 
is, in its own words, to sell “Merchandise of taste and quality 
at lowest-in-the-city prices.” It may stress other points but 
the essence of its advertising has been mainly price. 

Other stores have developed equally well-known institu- 


406 


THE MERCHANTS ’ MANUAL 


tional ideas. That of Wanamaker’s is quality insurance in 
buying. The institutional idea has been cleverly worked out 
by the store editorial. Local features have been introduced, 
and the personal element used. A clever bit of Wanamaker 
psychology is advertising to the classes in order to reach the 
masses—advertising to Mrs. Vanderbilt in order to bring Mrs. 
Newrich into the store. 

Franklin Simon Company features the advantages of spe¬ 
cialization; GimbePs stresses the quantity asset gained 
through its three-store buying power. D. J. Kaufman of 
Washington, D. C., calls attention to volume of buying and 
selling. Other stores feature service to the public, quality 
character of merchandise, etc. 

Figure 79 shows a purely institutional advertisement used 
by R. H. Macy and Company and stressing the low-price 
policy. As a matter of fact, all advertising should be insti¬ 
tutional in that it should be built round the store. Every item 
in the advertising should reflect the institution in some way 
or other, expressed or implied. 

Real Value Advertising.—Advertising featuring low price 
may be of two kinds: first, that of the store the essential 
policy of which is large value for money spent; and, second, 
the inevitable bargain sale. 

In spite of all argument to the contrary, there is probably 
no appeal which has a stronger hold than price. It has the 
enormous advantage over all other appeals that it is always 
timely. To combine what people need with what they want 
at attractive prices has always proved profitable. 

There has been much discussion regarding the use of com¬ 
parative prices, some stores holding that it is bad policy, and 
others maintaining that it is of definite value. The logical 
outcome would seem to be that comparative advertising is 
allowable when the comparisons are accurate, the values 
shown legitimate, and, in other words, the truth of the state¬ 
ments unimpeachable. The store which does not feel con¬ 
fidence in its own merchandising or advertising honesty would 
do well to abandon comparative prices. There is, of course, 
a distinction between advertising comparative prices and 
advertising comparative values. 


ADVERTISING 


407 


1 Jtf 

Not Just To-Day or To-Morrow , 
But EVERY DAY , Our Prices 
Are Lowest-in-the-City 

T HE watchword of to-day is economy. The extravagance of 
two years ago has passed away and the millionaires as well 
"the millions" think twice before they spend. 

Because of this. Macy’s opportunity for service has never been 
greater than now. For 64 years this store has steadily grown in size 
and in the esteem of the public, for the keynote of its policy has 
always been to sell "Merchandise of taste and quality at lowest- 
in-the-city Prices." Day after day, month after month, year after 
year, it has clung with unswerv ing loyalty to this principle. Macy’s 
has kept faith with the public. 

Better Things—at Lower Prices 

To-day this store is conspicuously the leader of the handful of 
great stores that have consistently striven to sell better and better 
things and at the same time fought steadily to sell them at lower 
and lower prices. 

That is why Macy s opportunity looms so large to-day. Thrift 
is in the ascendant; both rich and poor must save. But such goods 
as they must buy. they can always buy here for less than anywhere 
else. This pledge Rowland H. Macy gave to the public when he 
founded this store 64 years ago. We are fulfilling it every day. 

We believe it is to this policy that we owe the steadily increas¬ 
ing business which has placed this store in the forefront of the 
country’s department stores. When times are “good," we share in 
the general prosperity with the rest.'. When.times are "bad ” tbe 
public remembers that we always sell for lest-, and turns to this 
store quite naturally in its desire to economize. 

Dedicated to All the People 

There was a time when a store stood for just one thing-; it w'as either an "ex¬ 
clusive” shop for the rich, emphasizing the quality of its goods, or it was a store 
of "the people,” stressing the lowness of its prices. In those days low prices 
were associated with a ramshackle type of building. Handsome environment im¬ 
plied high priqes. 

To-day Macy’s combines quality and economy in one store, impressive in its 
architecture, up-to-date in its equipment and inviting in its displays. It is dedi¬ 
cated to the service of all the people as a shopping center for men and women of 
every condition and rank in life. Every day both the wealthy and those in ordi¬ 
nary circumstances are showing their appreciation of this service in ever-in¬ 
creasing measure. 

Macy’s great stocks, gathered togetliei from every part of the globe—con¬ 
stantly replenished, therefore always fresh—offer an assortment that tempts 
the most fastidious. And its prices are always below those of its competitors. 

Our Guarantee Is Quality 

No customer can ever be so exacting as we are ourselves in the selection or 
the goods we offer for sale. The cumulative experience of 64 years lends wisdom 
to our choice, and otir customers benefit by our knowledge. 

, If our merchandise were only the equal of others', the assurance of lower 
prices here should be enough to shape your decision as to where you will buy. 
But our guarantee goes further than that As far as it is humanly possible to 
discriminate, we offer only merchandise that is thoroughly dependable—goods 
that we are not ashamed to call our own and that we guarantee with all the 
force of our reputation. 

Macy's is centrally located, in the heart of the world’s greatest city. It is 
easily reached by subway, railway, elevated, or bus, from any part of New York 
and Long Island, and by fepry and tube from many parts of New Jersey. 

Spring is at hand. With a last wistful rustle of its skirts Winter has with¬ 
drawn. Easter is but a few weeks off. With a sense of growing responsibility 
to the community, Macy's has .prepared better than ever for a Spring business 
which, we hope and believe, will be bigger than ever. 

Merchandise of Taste and Quality 
at Lowest-rin-the-City Prices 


X 



HereW Squire <_£vzc. (/ New York 


Fig. 79.—Example of institutional advertising. 




















408 


THE MERCHANTS’ MANUAL 


Timely Advertising.—Certain times of year have become 
almost fixtures for seasonal sales. On the whole, however, 
the modern tendency is away from seasonal sales unless there 
is an actual opportunity, or necessity, for such occasions. 


All Chare* Purefcaac* T 1 \ /\ 1 f 

“Hr Jordan Marsh Company 


Do Cbfataii Sb*ppta| 
£art r — Chriiiwu U 
ln< Than F1»« 
Weeks A way 



From the Street Floor of Our Annex 



A Manicure Set 

With a Gray Suede Case 

All tha flu Inga aro manufactured Ivory la th# 
dainty Dubarry pattrrn, ro*c colored 9ailn lining 
and strap*. 10 fittings .10 00 


Brown Suede Case 

Men Ilka It* compactness and the sharp, good 
#te«l pf IU manicure y plocrs. corn plat* 6 00 



Imported Jewelry of 

Powder Blue 


(Some call it Lapis’tone) 


The setting* are curious shaded 
Oiolal In sllvar shades, a beautiful 
foil for this rich 
blur--scene of th* 


A Pendant 

en n delicate silver 
chain —with sum II 
powder bine ben.l* 
bens* I he large jx-nd 
«nl w III) gm pc Icnva 
ol I lie top 5-00 



Pyramid 

Earrings 

carry |>eorl and bluo 
tassel effects, pair 

375 



Laurel 
Wreathed 
Garrings 

with powder 
bluo centre 
and long 
drops — strik¬ 
ing and uo- 
u»ual—for 

75 




Perfumes from Paris 

Houbigaot’s Quelque Fleurs 

Perfume—1 oi 4 00—* 0* . 7 

Toilet Powder.100 

Face Powder ... . 200 

Roger ft Onllet 
Fleurs D’Amour 

Toilet Water.4 90 

Perfume ... . . 6 50 

Toilet Powder ... | 25 

Face Powder .. .3Q0 

Coty's Styx 

Perfume—I o* 4 10—about : or.6 50 

Toilet Water—5 os 4 00—6 os , . . 7 25 

Face Po «dtr—Flesh, white rarhel .g5<« 

Toilet Powder—Class bottle, sifter lop . J QO 


A Handbag 

with Cut Steel Beads 


Noll Heads, too 

Add to tbo effective¬ 
ness of ibis (mart 
French Pag with its 
cut steel top and cliaio. 


50.00 



Bracelet Handles 

give a different touch 
to this bng of London 
Faille so exquisitely 
beaded in very fine steel 
beads—from Paris, still 
it costs but 

40.00 



Two-Tone Toilet Sets 



Shell and Ivory Effects 


Ol ***» r THREE PIECE 

1 1 . / 5 SET 

You'll love their glorious colors—the deep, 
almost mahogany tone of the imitation 
ahell with a clear, narrow ivory toned 
edge—three-piece set ia 13 95. 

Othrr Toilet Articles in two-toned effects, 
1.50 to 725 cock 

A Splendid Variety of Other Tvllel Sets Moy B« Had at 
Moderate Prices In Manufactured Ivory. Ebony and 
Shell Eflocta. 


The “Write” Gift 

Smartly Continental 

Is this new stationery selected ,o Gurop* 
by oor buyer. Especially odd are the 
linings. 

Nuit Chiooiso with very odd linings.-2.00 

Versailles with smart shapes.2.00 

R.idjah with decorated envelope Asps 2.00 



Fig. 80.—Example of timely advertising. 


Christmas sales, vacation sales, etc., are perfectly logical 
because they are timely and fill a merchandising want. But 
anniversary sales and birthday sales too often are manu¬ 
factured out of whole cloth as an opportunity for offering 










































ADVERTISING 


409 


bargain merchandise. A seasonal sale, however, may be quite 
timely, depending on the circumstances. 

Opportunities for timely advertising are constantly occur¬ 
ring. A clean-up week, for example, gives the store occasion 
to feature a certain class of articles. Figure 80 shows an 
example of timely merchandising combined with a timely sell¬ 
ing plan. Christmas, the timely element, combined with the 
gift appeal, and departments grouped together, are an occasion 
for timely advertising. 

Store-wide Advertising.—Many stores often feel it 
desirable to advertise the entire store in order to stimulate 
immediate business. The appeal is generally on a price basis, 
such as McCreery’s ‘‘Economy Days,” Strawbridge and 
Clothier’s “Clover Day,” or the “Dollar Days” often featured 
by stores. 

According to Joseph B. Sheffield, former Advertising Man¬ 
ager of Abraham and Straus, store-wide advertising possesses 
the following advantages: 

1. It gives representation to a large number of departments. 

2. It gives the smaller departments equal footing, from time 
to time, with the larger ones. 

3. It attracts attention to practically every department in 
the store, and is, therefore, a valuable tonic if prescribed with 
moderation. 

4. If properly merchandised, rigorously limited, and per¬ 
sisted in, it possesses considerable cumulative effect. 

5. The advertising of a store-wide sale is usually so totally 
different from the store’s usual publicity that it is bound to 
attract attention. 

Figure 81 shows a specimen advertisement used by Abra¬ 
ham and Straus as a means of focussing attention on early 
holiday shopping. 

Fashion Advertising.—Certain advertisements, particu¬ 
larly at certain seasons, are fashion advertisements. Outer 
garments are a conspicuous example. They are not only 
something to wear but there is an added quality, intangible 
yet definitely worth a price, which must be considered. In 
other words, fashion advertising must not only sell the goods 
but it must also sell the fashion idea. 


410 THE MERCHANTS’ MANUAL 




Abraham ^Straus 

CTbc Christmas Store Accommodating 


INC 


Here Is the Christmas Gift Thrift Sale Picture Page 



Stationery in 
Cretonne Boxes 
81.39 


laaeO t.ni.h .(alionafy >« 

* pf«ny €»«!#«»• wind 

cahiaef >« • combioadon that 

• ill »iki • perfect hil IkD 

>■ U ikMU of paper 
••4 48 eovtkope*. *( »*dl 
••4 enter pmt or blur paper 
Ml *nh ribbon* Made to 
Mil f#r tl «8 

• * • *.» 



Girls* Taffeta 
Drosses, $11.50 


Made of ufl quality cl 
Taffat* *4th • quaint in 

Mck bodice end ■ puff- 
barn mad ikifl, Kti'i cut 
•act and ahori umto 
►»*» »• n».y Situ • It 



Heatherbloora 

Petticoats 

81.98 


Tint iri (he geeuJnc 
HuiVtlK* F<mco*t* la 
aaoJgbtUea a>a4tl *iih cord- 
«4 M4 abated fkouecee 
Muk cf *ub Raatta 



Boudoir Lsmps 


87.45 

Reduced from $9 95 

Ivory •' k'MH liaitb 
meul boudoir lamp, in *■• 
iiiii'h drvgn Oat li|kl 
Caaipl*'* »Mh mtial giaaa 
ah dr u> m.ich titad lamp* 
cic told atibaui bulb* 



Tambour Mantel 
Clocks. 88.50 


Reduced from $12 75 


Wd b«>« iatl rrctivfd ta 
••bar aAipmeri •( ib w beat* 
aifol iltfkl tad u(((U itta 
Iff gift, faaty lialwii 

ahape* 4*'t mahogany f.a 
lab fintd *nh t'ghi day 
|WUKH movement Horn 
aad h.lf haul etr.ke oa Ceihe 
4tal foa| 


• . I.M... u- t«..i 



fox Scarfs 
834.75 


There tf« ICO of ik<« 
•evely warfy at ibit recep¬ 
tion ally lo* price Beautiful 
American lot taupa at 
browa. lined *irh ettpa me- 

ttci tec -Urn. unnl 



Women's 
Cauntlet Cloves 
83.98 Pair 


Reduced from $5 74 
Revernble tuff* of rt«ktd 
or iiripdf black and while 
add aa uaututl touch to rheao 
*ary taian glove* Tbay etc 
cl fetich glaca lamb »hiw 
with black ttrap. 



Women's 
Umbrellas. 84.98 


Good-looting umbrella* 
(thwart wcicomt gift*') of 
tafftta tilt, in arract colore, 
bandlca of baktlnt with riag 
or leather loop fapt. >11 In 
ulk cacao—*t at aicapuonal- 
ly la* pric* 



Trimmed Pin 


Cushions. 98c 

Reduced from Si.SO 

Slut or rota tana Fin 
Cu.hioni in round or oblong 
thapa*. covered anh gold 
laca and yrimmed with '.w 

bad. 

4 a • — *•«»• Saa- t»MNI 



Eyelet 
Embroidery 
Neckwear. 75c 


A .man diiala collar *i«h 
cufft io match to effective 
on a dark tuii or frock 
Dainty .atrcca in lha tama 
dftign with Tuacdo collar 
at ih* tama pnea 



Jeweled Silver 
Bracelets’ 83.90 

Reduced from $8,40 


A tlmdrr banglr agl-nrr 
*nb learh' Srerlmg a.I.rr 
in *irh liny brilliant v}u.'< 
>ui iion.i m rhiattroact 
a. Ophite* lopaa aad emer 
alda 

a a • -••••*« Saad ik M dV 


ll is a real album of gill suggestions'—anevcnl looked for eager* 
ly each Chrisimas season by gift-seekers. 

Each offering is especinjly selected for its appropriateness as a 
Christmas gift Each .s SPECIALLY LOW PRICED for Thurs¬ 
day. Quantities are limited in some cases, but we hope that there 
will be enough to go 'round. The moral is. SHOP EARLY • 



Women’s 


Tuxedo Sweaters 
84.65 

Reduced from S6 95 

Wool S»rai»n with collar 
aad cufla of coairataag 
color bruahed »ool. black 
anth vhiic green with »hn* 
or brown with buff 

a 4 '• ■4wys 4— ^»s«4l 



Collar Laces 
81.59 

Formerly $230 and 
82 75 Yard 

The moat charming import 
od VcnlM lace*. cut it K«- 
yard collar knaiha. daiory 
liido deeigna ill vbiio pr 

rraam Uaually told by fba 

yard, but apecially cui and 
priced foe the Cifl Thrift 
Sate 

a O I MM Mm u.11.1 



Hand Mirrors 
88.95 

Were $1025 lo $17 43 


Charming Hand Mirror*, 
m .ariout .hapat loitbtd m 
aniigua goto itory or an¬ 
tique with colored Dover* 



Outline of History 
By H C WeUi 
88.95 

Publuhed al $10 50 
The rw* .olumy mi •( hit 
lor» by H c Well, yhai hat 
cauMd to much d'Muttion in 
• ha literary world Ona of 
rhr moti wonted book, «* the 
teaton — p'olv-rl, illuilr ud 


Serving Trays 
$1.98 

Were $239 lo $2 75 

Anroenrt o.at Sorting 
Tray, ■« mahogany Am.li. 
rtrhed flat, co.«r fell hath 
Ju,i l«J ol ihew rrayi al 
■hit lo* price 



Handkerchiefs 
81-25 for 6 


A dainty Chrittmaa baa af 
handkerchief*. 8 m a bo, 
white handkerchief*, each 
one corner mbretdered m a 
prariy deaiga and pleatiag 
color* 

COO -WlMV Cm- r-.ini 



Women’s Crepe de 
Chine Blouses 


83.98 

Fashioned of heavy qual- 
•Iy Crepe de Ohme -o *bne 
or fWah. *nh Fetor Fa* col¬ 
lar and tucked boaom 

* a a-w«r m. Cm 



Dresser 

or Table Scarfs 
98c 


A dainty tcarf of the cor 
raci dietter length trimmed 
with decorative laca At a 
price far belo* tha everage 



Sterling Silver 


Candlesticks 
810.45 Each 

Reduced from $12 75 
Htndtomc Gandlctticki in 
the alvayt favored Colonial 
palicrn i0 indict high 
Bright I'mUted titvar 



Photograph 

Albums 

98c 

An tapreieUy loo price for 
a photograph album ihai to 
race lien i dor gift giving 
Loom teal album for oa 
mounted pheiogrepha 



Women’s 


Silk Stockings 
81.74 Pair 

1.400 pair* of ihevc tioak- 
mgt! Of beautiful ulk they 
*•11 make eteelkent gift*, the 
kmd th.i veer *ell and took 
• ell Black ingrain till 
morccrited tote, 

... ..aa Mm c-v*I*• 



Girls’ 


Corduroy Robes 
83.75 

Wid# **le Orduroy of toft 

baavy outlity breakfati 
modal la cherry color or Co¬ 
penhagen S'taa 8 lo I* year* 



Candy Jars 
83.49 

Reduced from $4 98 


Thi* daioty Utile lady k* 
potted eiop a glut candy 
l*r. *hnh it bidden by her 
a*irly akina aad a hand- 
pamicd gift card comao «uh 

her. ^ ^ 



Rich Fruit Cake 
98c to 83.04 

Reg $104 loti 26 


Made of the fmatt tagra 
d-rni, a«d baked m out urn. 
light bakery they are *l 
iracnvcky pul up in ho.e* 
kmeli ho.e, le act. na, 

• tight btr- rceularly »l Da 

Mre.u- hoi r, j IU aa 

• eighi H M, regularly Vi J* 
l.rgr bo«e» J Ibe oei ,n|ki. 

U.0«. reeiflarlj ^ ^ 



Ivory 

Pyralin Sets 
815.44 

Reduced from $23 16 

Attractive dr v ai un that 
• ■II mat* accepiablo glfih 
Contiaung of m piece, 
comb bru.h, bonnet mirror 
buffer, nail 10 a tod buiio* 
IrflOh 

a a 4 k m cod- 



Close-fitting 
Feather Hals 
82.89 


Saiarr lurle try lea io Haft 
cl p.krcd feather, tad Oa- 
trrch flue*, wvcral model! tl 
rbia price lone piciuredf 
Colora Henaa. phrauai. 
aavy Copenhagen brovo 
end Olber dark ronea 



Women’s 
Fell Slippers 
81.69 Pair 

Reduced from $1 98 
Ribbon (rimmed Slippery 
I* olo roae. orchid Copen 
hagen. taupe, lavender 
br»»n O, ford grey Bur. 
gundy and navy btota Fad 
ded hole, and heel*. 

. a a -uimi *■ •« 



Beaded Bags 

822.90 

(Including Tax) 


A beaded bag ihai it glo* 

• eg in color and aianniog io 
deaiga O^l-vhaped. vilb 
a.rural colorhbell lika frame, 
■bra bag to' a full, roomy 
model, wilh lining of loffelo 
ailk aad vanity puree 'aad 
mirror frumpy 




Humidors 

85.98 

Reduced from $6 46 


Throe humidor*, turned oOl 
by one of tha rr el reliable 
manufacturer* m the coun¬ 
try, are perfect la every re¬ 
aped. aad *ill keep cigar* » 
perfeca condlricm They are 
copperma lined, aad hold SO 
cigar*. *nd *ill make oa cv 
celleal gift for HIM. 

n. * C-»~m Or- *-V 



Crepe de Chine 
Sacques 
83.69 


Reduced from $J 95 

Of fiae gaahiy Crepe de 
Chine m dainty colon of 
Ughi blue end p>nk (rimmed 
vilh Valenciennr* lace and 
ribbon ba«a Sue* M ia 04 



Men’s Scarfs 
78c 

Very Low-priced 


Silk Four-iaHood* * o 
*ond«rful vanery of hand- 
tome poiiero* and epprovod 
vhapra Figure* (inpca and 
**i*rl plain color* Al very 
much kii rhan uaoal yrgo 



Children's Auto 

87.45 

Reduced from $6 95 


A atvrdy outomohilt for 
(ho yoongiier*. *uh i.kaai- 
lirud vheato tree I frame and 
*d«ipp*d *i(b bumper 
ai.'irr tad alatl I irr- I«g 

•baa 



Chocolate 
Peppermints 
49c Lb. 

Regularly 54c 
Ocivcww* Muni.uk choco- 
laie pcpparmiatt it o 
Cknumii, boa Itopper 
"inr* of tmooiheai wiaa. 
caver*4 *uh rich chocolatt 



Cut Class Water 


SeU. 813.25 

Reduced from $19 95 

Spoakllng cryttal btonka. 
handoomcly c*( in a pr«My 
<ombin*(ion of floral lo* 
liege oad oiher fine cuuiagt 
Sera comm of i^/piol 
pitcher and aa (umbker* 


Fig. 81.—Example of holiday advertising. 


9 













































































































































































































































ADVERTISING 


411 


Fashion advertising is the occasion of much fine writing, and 
often much hyperbole. Figure 82 is a good example of 
fashion advertising. Items must not be so many as to confuse. 
Price should ordinarily be subordinated to illustration and 
description. 



Condensed Appeal.—Condensed appeal has been defined 
as a selling story in small space but with big drawing power. 
One department is featured in such a way that customers will 
be interested in all departments. Such advertising as is illus¬ 
trated in Fig. 83 is becoming more and more frequent as a 





















412 


THE MERCHANTS’ MANUAL 


means of giving special emphasis to some particular item. 
In this case Thanksgiving is used as an argument for out¬ 
fitting the maid. There is a human appeal through having 
the maids well-dressed and happy. The festive air of the 



Built on value; growing on value 


Thanksgiving — a splendid time 

to outfit your maids 

The psychology of being well- 
dressed to be happy applies to 
your maids as well as to your¬ 
self. And crisp new uniforms for 
them will do much to add to the 
happy, festive air aboutyour home. 

The uniform sketched is black or grey silk 
poplin, with double hemstitched collar 
and cuffs of white organdy. 18.75 

Black cotton pongee uniforms with tail¬ 
ored organdy collar and cuffs. $3 

Morning uniforms of striped or figured 
percale, black on a white ground. *2.75 
Blue chambray uniforms, with the high 
collar which is convertible. *3 

All in sizes 34 to 46 

Maids’ uniforms in the machine-made 
dress shop—mail orders filled—sixth floor 


Fig. 83.—Advertisement emphasizing a few items. 

home is also brought in as an argument. Price is subordinated 
to the story. 

Quality Advertising.—Almost every item in stock has 
some quality points which may be brought out, regardless of 
how cheaply it may be priced. Therefore, quality in adver¬ 
tising is an aim which should always be sought. 









ADVERTISING 


413 


Guy Hubbart, of the editorial staff of the Dry Goods Econo¬ 
mist, suggests ten quality points which may be featured for 
fabrics and garments: 

1. Those which are a part of the goods or material, such as: 

a. Sheemess, body, color. 

b. Fine or coarse weave, design. 

c. Softness or firmness, pattern. 

d. Weight, texture, finish, sheen. 

2. Those which are a result of the workmanship of making, 
such as: 

e. Deep hems, full width or length. 

f. Well-made buttonholes, well-sewn buttons, fine stitching. 

g. Good style and models. 

3. Those which are the result of skilled workmanship, but 
expressed in effects of it, such as: 

h. Comfort, fullness, closefitting, shape-fitting. 

i. Fit, “set,” grace, outline. 

j. Distinction, distinctiveness, individuality, etc. 

For any other type of goods there will be a similar group 
of quality points, classified according to the three main head¬ 
ings of the material, the workmanship and the results of 
workmanship. 

Novelty.—To attract interest is a fundamental considera¬ 
tion in all advertising. Therefore, any advertisement which 
can bring the attention of the reader to it immediately has a 
certain value. The opportunity of the advertising department 
to provide original and interesting material is almost unlimited 
and the results to be obtained valuable. 

To be original does not require freakishness. Difference of 
treatment does not call for the so-called advertising “stunt.” 
Good advertising need never become undignified. 

One method of being original is to alter the physical aspect 
of the advertisement. A hand-written advertisement appear¬ 
ing from time to time is certain to secure attention. Figure 
84 shows an excellent example of novelty secured through 
carrying out the headline in the illustration and layout. “Seen 
Through the Opera Glasses” provides an opportunity for Best 
and Company to illustrate fashionable offerings for opera 
wear in a novel fashion. 


414 


THE MERCHANTS’ MANUAL 



Aula furnishes inspiration 
fat C>t4s htaddrcn of Mock 
heads—Pension in on gin, 
bwl decidedly Egyptian m 

armospherr 1250 

Other head dresses end 
bandeaux of metal cloths 
o* JeurUd fabnes 


TV* shimmer of sea-green 
—clock, viik bandt 
of stiver laoc reaches a 
gloving point of color m 
ihe litrLr rxofic unatki of 
flowers on tk< corsage, and 
—Kalf-vriUd by loco—on 
the »kt«. 


B EST 6* CO presents for Opera uear French 
models, replicas, and the works of the fore¬ 
most American designers in gowns and wrap*; 
and a choice collection of those accessories that 
mark the distinguished costume. 

Opera gowns of metal cloths, velvets, chiffons, 
brocades, beaded, embroidered or combined 
with rare laces. 75.00 to 350 00 

Opera xiraps of Paisley brocades, cloth of gold 
or silver, velvets fur-collared, fur (rimmed or 
fur-lined.125.00 to 375.00 


nil 


Suady enough /o» a 
mediae* al coronation — <9 
for a flrsl night at th* 
Opera — u du« r<pn>. 
duiTx n rj a CaliO# model 
m p«IJ brocade u*ck rppe» 
of pear U 


A ND even the oper* bag mey be e Camt/n ot a 
. CoLmbmc, if one cbooaea this newcat of French 
caprice*, fashioned of silks end velvcta end lecea, with 
e quaint little painted heed . . • 12.50 to 25.00 

When silver cloth line* Itself with Chinese red georg¬ 
ette and uses huge collar end cuffs of fitch* there la 
little more to be said In the way of an Opera wr»pl 

Ermine, velvet and Bernard conspired rogetherl The 
result was the opera wtap here exquisitely reproduced 
In ature, with on amusing hand-smocked design so 
cc tiling shoulder—end hcm-lin* 


LONDON 


PARIS 


Fifth Avenue at 35th St,—N. Y. 

£uabli»ked i flyp 


BEST 6s COMPANY 


FIFTH AVE.. N.Y. 



C qJ’AwOU.^A 'tAsu 

E1HA GLASSES 

.... Opening night at the Opera. Jeritza in La Tosca .And 

forming a background for Jeritza’s charm and beauty," for the 
ineffable life and color of La Tosca’s music is thatsemi-circle of 
elegantly gowned women, who express in their, costumes the 
same ideals of creative and interpretive art that the Metropolitan 
Opera Company reaches in music. 


Fig. 84.—Use of novel idea in the advertising layout 





































ADVERTISING 


415 


Novelty is best fitted for fashion advertising, although it 
may be carried out to a lesser extent in the advertising of 
staples. 

Another method introducing originality is to advertise an 
article prominently which is usually not advertised at all or 
else given little space. Handkerchiefs are a case in point. 
Merely to feature handkerchiefs is novel. 

Certain stores have attempted to make their advertisements 
appear in the light of news. Other stores have featured cou¬ 
pons. Other stores have had special columns, written by some 
specialist. 

Distinctiveness.—Distinctiveness is carrying out advertis¬ 
ing novelty according to a regular plan. It is measured in 
terms of its relation to oddity, display, novelty, or illustration. 
It may be applied equally to every phase of an advertisement. 
It is especially valuable for quality advertising, because it 
identifies the institution. 

Distinctiveness in advertising allows a store to make its 
appeal to the public with less outlay and money for space. 
A single advertisement or a series will be read by more people 
of a class, and with more interest. 

A likeness of treatment is the first essential of distinctive¬ 
ness. In many cases the customer identifies the advertisement 
by its appearance before she looks for the name. The Lord 
and Taylor advertising is a case in point. Continuity in all 
their advertisements is maintained by a “family resemblance,” 
with variety enough to stimulate interest. As the advertising 
director of the store at one time said, 

We try to design our advertising as a unit. The principle is that 
good things, appealing things, do not just happen—they must be 
charted. Their expression must not be obvious. The column in the 
cathedral may be decorated but it was designed on the blueprints 
to hold up the roof. 

We try to work in harmony with the law that a pleasing impres¬ 
sion must be made by the appearance of the advertisement before 
the message can be favorably received. As the eye sees the advertise¬ 
ment before the brain grasps its import, it seems logical to capitalize 
that quick appraisal of the eye 100 per cent in our favor. 


416 


THE MERCHANTS* MANUAL 


Figure 85 shows a Lord and Taylor advertisement cast in 
what they call their master mould. Such advertisements are 
often remembered a long time after the routine series is gone 
and forgotten. 



Fia. 85.—One of a series of advertisements which have a “family resemblance.” 


Advertising Essentials.—All advertising should do three 
things: 

1. Attract attention. The appearance of the advertisement 
is most important for this purpose. Illustrations are also an 
important factor. Headlines and signature must be carefully 


































ADVERTISING 


417 


considered as a means of attracting attention. Securing 
attention, however, is only one stage. 

2. Arouse the reader’s interest. The arrangement and the 
layout of the advertisement lead directly to the presentation 
of the reading matter. Belief in the goods and the general 
appeal of the whole to the buying habits of the customer lead 
to the third point. 

3. Create desire. A want is created by giving details of the 
merchandise. The higher the price the more details are neces¬ 
sary. For a 10-cent cake of soap little description is necessary, 
but for a grand piano a great deal of space will be required. 
Necessities are generally, therefore, given small space, and 
advertised in connection with other necessities of a similar 
character, usually on a price basis. Luxuries are given more 
room, and treated with a more individual appeal. 

Desire is created by all the methods previously described 
of quality, price, reputation of the firm, fashion and style, etc. 
It is also possible to appeal on the grounds of healthfulness, 
cleanliness, efficiency, modernity, sympathy, imitation, sport, 
etc. 

Illustrations.—The value of strong illustrations in copy 
wherever possible is generally recognized. The pictorial im¬ 
pulse is universal, and, next to a human being, perhaps nothing 
is more personal than a picture. Furthermore, from experi¬ 
ments made in the research laboratories of national adver¬ 
tisers, it has been discovered that pictorial interest is stronger 
with women and children than it is with men. As 90 per cent 
of the average dry goods or department store purchases are 
made by women, the value of illustration is even more note¬ 
worthy. 

Investigation by the advertising group of the National Re¬ 
tail Dry Goods Association brought out the fact that adver¬ 
tising managers are almost universally in favor of the use 
of cuts. Buyers were quoted as strongly preferring illustra¬ 
tions and many “would prefer an illustration and a price with 
little description.” In cases where cuts are not used, it is 
largely a question of advertising policy. 

The value of illustrations is unquestioned: 

1. People want pictures. It helps them to visualize the 

27 


418 


THE MERC HANTS’ MANUAL 


merchandise, and gives them a better idea of what is for sale 
than does a mere description. 

2. Cuts add to the attractiveness of the advertising. “The 
pleasing appearance of a skilfully designed and illustrated 
advertisement produces a corresponding psychological effect.” 

3. Illustrations attract attention better than the most strik¬ 
ing headline. Attention is focused on the advertisement. 

4. The cardinal principles of advertising, to attract atten¬ 
tion, to arouse interest, and to create desire, are fulfilled. 

5. Illustrations get better results than plain copy. One 
store claims results obtained from cuts are from one-third 
to one-half greater than in advertisements where only general 
copy is used. 

In an analysis made of 345 letters sent the Chicago Ameri¬ 
can by its readers in an advertising contest, the reasons for 
the domination of a particular Marshall Field and Company 
advertisement were given as follows: 

Per cent 


Illustration.22 

Appeal to saving. 21 

General appearance. 15 

Impression of reliability. 14 

Authoritative style. 12 

Timeliness. 7 


Other reasons were scattered. Illustrations, however, were 
regarded by customers as most effective. 

Rules for the use of illustration vary with the policy of the 
house. The following suggestions are generally applicable: 

1. A few cuts well distributed are ordinarily better than a 
great many. One store makes a rule that the total number 
of illustrations in the advertisement will at no time exceed 
the total number of columns that the advertisement contains. 

2. Only high grade art work should be used. 

3. Cuts should be sufficiently large to show detail. One 
advertising manager writes that he has even shown the pat¬ 
tern of lace, fabrics, and rugs with excellent results. 

4. Cuts should be the exact reproduction of the merchandise 
on sale, as customers frequently ask for the same article as 
the one pictured. One store using syndicate illustrations was 








ADVERTISING 


419 


embarrassed by the demand of the customer for the particular 
item illustrated. 

5. Illustrations should seldom be used merely to make the 
advertisement artistic, but rather to attract the customer 
towards the selling appeal. 

General consensus of opinion seems to be that the following 
departments are most benefited by pictorial advertising: 

1. Apparel and fashion goods, including cloaks and suits, dresses, 
boys’ and girls’ clothing. 

2. Millinery. 


Table XV.— Cut Sizes 


If Your Newspaper Column Is 


If Cut Is To Be 

12 Ems 
Wide 

12)4 Ems 
Wide 

13 Ems 
Wide 

1 Column Wide. 

2 

2 

2)4 

1 Column Inside Border. 

m 

1% 

124 

2 Columns. 

4 

4)4 

4 24 

2 Columns With Border. 

324 

3% 

4 

3 Columns. 

6 H 

6 ^ 

6 

3 Columns With Border. 

5% 

6 

6)4 

4 Columns. 

8)4 

8)4 

8 Vs 

4 Columns With Border. 


8)4 

8)4 

5 Columns. 

iom 

1024 

n)4 

5 Columns With Border. 

10 

10 H 

1024 

6 Columns.. 

i m 

12Vs 

13^4 

6 Columns Inside Border. 

12 

12)4 

13 

7 Columns. 

uy 2 

15 

1524 

7 Columns Inside Border. 

uy 8 

1424 

15)4 

8 Columns. 

16 )4 

17)4 

1724 

8 Columns Inside Border. 

16)4 

16 Vs 

17)4 


For 16 columns double the measure of 8 columns and add to this the 
margin between the pages (called gutter). 

The sizes given here are in inches for 12, 12)4 and 13 em columns 
respectively and are figured from margin to margin (flush) and the border 
allowance is for a 6 point border with 6 points margin between the border 
and the cut on each side. 

For a 12 point (or 1 em) border make plates % inch narrower. 


























420 


THE MERCHANTS ' MANUAL 


3. Housefurnishing. 

4. Furniture. 

5. Shoes. 

6. Jewelry. 

7. Floor coverings and draperies. 

8. Toys and phonographs. 

9. Basement and popular-priced goods. 

Table XV shows sizes of cuts, used with and without bor¬ 
ders. Measurements are in inches. 

Gravure.—In the past 10 years the Sunday gravure sections 
have become features in many newspapers. The advertising 
value of representation in this section has been generally 
recognized, owing to the universality with which this part of 
the paper is read, and the length of time it is kept. Most 
newspapers require advertising material in the gravure section 
to be illustrated, that it may be in keeping with the policy 
of making the gravure section primarily pictorial. 

Since the art gravure process accentuates, photographs made 
on glossy or semi-glossy paper, with detail in the high lights 
and detail in the shadows, with a full gradation of tones from 
high lights to shadows, are best. 

According to Perry Arnold, manager of the Art Gravure 
Group, type should never be under 8 point, while 10 point is 
better. Solid, substantial type such as Cheltenham and Cas- 
lon are good, while thick or thin letters should be avoided. 

The type may be either black on a w T hite background or 
gravure tone background, or else white letters on a dark back¬ 
ground, known as “flashing in.” 

Since gravure work is still done a great deal by hand, the 
printing is slow and copy for the gravure section should be 
in ten days or two weeks in advance of the date of publication. 

Type.—The selection of type to be used in newspaper 
advertising should satisfy three requirements: 

1. The type selected must not only be readable, but easily 
read. 

2. The type must be suited to the size and shape of the 
space in which it is to be set. 

3. The type, including cuts, must be properly arranged. 

These three rules are so interdependent that it would be 


ADVERTISING 


421 


difficult to pick out one which is really more important than 
the other. As a rule, an extended type is more legible than a 
condensed. The long sharp lines of the condensed type have 
a tendency to tire the eye. The extended type is more restful. 
A fancy type, if not difficult, is at least very tiring to read. 
Since beautiful and legible type faces are available in great 
variety, there is seldom an excuse for sacrificing easy reada¬ 
bility to artistic effect. 

As to the size of the type, very large type is not easily read 
when set in a narrow column that requires frequent breaking 
up of words and irregular spacing, nor is small type easy to 
read if set in a wide measure. The eye finds it difficult to 
find the place when traveling from the end of one line to the 
beginning of the next. The proper optical length of a line 
varies with individual vision. It is better to err in favor of a 
short line than to overburden the reader with a line which is 
too long. 

Too small a type face or any form of italics is hard to read. 
In some instances italics may be justified as a matter of 
emphasis, but it is, nevertheless, wise to avoid their use as 
much as possible. Small capitals and capitals may be used 
to give emphasis to important words, slogans, or phrases in 
the text of an advertisement. This purpose may often be 
gained by such use, but promiscuous employment is inadvis¬ 
able. Too much emphasis destroys the effect. 

Emphasis may also be obtained by display, that is, by lift¬ 
ing the desired line above the average run of type. Here again 
it is necessary to use moderation lest the desired effect be 
entirely lost. 

Copy.—There are four main parts to advertising copy: 

1. The headline and captions. 

2. The introductory matter. 

3. The department headlines. 

4. Item descriptions. 

1. The headline. The headline tells at a glance what the 
story is about. It stimulates interest and saves the reader’s 
time. It must be truthful, newsy, specific, clearly phrased 
and perfectly understandable. 

Headlines are of two kinds, first those which tempt the 


422 


THE MERCHANTS ’ MANUAL 


curiosity of the reader and, second, those which disclose the 
object to be sold. The first type is little used; the second is 
the ordinary type, such as “Furniture Sale,” “Splendid Oriental 
Rugs,” etc. Headlines, however, should be more than mere 
labels. They should, if possible, contain some active thought, 
like newspaper headlines. Instead of saying merely, “Splen¬ 
did Oriental Rugs,” it is better to say, “We Have Never Of¬ 
fered Better Oriental Rugs at These Prices.” 

2. The introductory matter. Introductory matter, when 
used, follows the main headline. The modern tendency is to 
omit this unless there is some particular reason for expanding 
the idea in the headline. It may present the store’s attitude 
about its own goods, tell how beautiful, how attractive, how 
reasonably priced, how large an assortment, etc. 

3. The departmental headlines. Departmental headlines 
introduce individual items in the text. It is customary to 
emphasize those to which attention is desired to be called first 
of all. Generally articles which the customer will look for, 
whether displayed in a prominent position or not, are subor¬ 
dinated to articles requiring special selling effort. 

4. Item descriptions. The text is made to fit the subject 
matter of the advertisement. A utility article naturally re¬ 
quires quite different treatment from a luxury. Similarly, 
a man’s article is described in a different fashion from a 
woman’s. In fact, each group has certain individual charac¬ 
teristics. 

There is some difference of treatment in description due to 
the locality of the store. In small towns and cities a fuller 
description is required than in a large city. People in small 
towns are likely to be interested in the goods themselves. If 
descriptions are not accurate, the mail-order houses are likely 
to reap the benefit. 

Since the sole purpose of retail advertising is to make the 
customer want the goods, the text is of great importance. All 
the previous parts of the copy have merely led up to the 
actual description of the goods themselves. Important selling 
points must be noted. It is necessary to tell what the goods 
are, their use, their price, the size, the color, and any other 
salient facts. 


ADVERTISING 


423 


Items of description should not be too many. If so, they 
become lost and the attention of the reader wanders. Simple, 
straightforward language is better than big words and extrav¬ 
agant statements. 



TYPE-SET HEADS IN_... -_SET. BODY .IN ---■ 

RUlBS: ___ BORDER: ORNAMENTS: _. 

ESTIMATED TIME ON THIS PAGE IS _ HOURS _TIME CONSUMED-HOUR! 

Layout Sheet—United Typothetae of America 

Fig. 86.—Specimen layout sheet. 

Layout.—All advertisements should be planned on dummy 
layout sheets. In this way advertisements may be balanced 
properly, and the emphasis laid on the departments it is de- 


























































































































































































































424 


THE MERCHANTS' MANUAL 


sired to feature. Balance means equality between the two 
sides, not necessarily an exact symmetry, but an arrangement 
of blacks and whites so balanced that if the area of each were 
plotted on a disk and the disk rotated the effect to the eye 
would be a medium gray. To get best results, the layout 
sheet should have no copy written on it. Figure 86 shows 
a specimen layout sheet which is made to correspond with 
the size of the advertisement used and prevents all misun¬ 
derstanding with the printer, as everything is down in black 
and white, measured according to ordinary standards. Lines 
outside are for different width margins. 

Copy should be typewritten double-spaced on a separate 
sheet according to the following tables, which show number 


Table XVI 


Size of Type 

Type 

Set Solid 

Type Set 

1 pt. Leaded 

Type Set 

2 pt. Leaded 

5 Point Type 

13 Lines to One Inch 

Words 

52 

Words 

46 

Words 

40 

6 Point Type 

12 lines to One Inch 

47 

40 

34 

7 Point Type 

10 Lines to One Inch 

38 

32 

27 

8 Point Type 

9 Lines to One Inch 

32 

27 

23 

9 Point Type 

8 Lines to One Inch 

27 

23 

20 

10 Point Type 

7 Lines to One Inch 

21 

18 

16 

11 Point Type 

6^ Lines to One Inch 

17 

15 

14 

12 Point Type 

6 Lines to One Inch 

14 

12 

11 









ADVERTISING 


425 


of words required to fill space in any given type size, space 
required to hold a given number of words in a given type size, 
and type size required in setting a given number of words in 
a given space: 


Table XVII 


For One Line of Type 

5 Point Type 

6 Point Type 

8 Point Type 

9 Point Type 

10 Point Type 

11 Point Type 

| 12 Point Type 

1 in. Wide 

24 

20 

18 

17 

15 

14 

13 

(6 Picas Wide) 








1Y in. Wide 

36 

30 

27 

25 

22 

21 

19 

(9 Picas Wide) 








2 ins. Wide 

48 

40 

36 

34 

30 

28 

26 

(12 Picas Wide) 








2 Yi ins. Wide 

60 

50 

45 

42 

37 

35 

32 

(15 Picas Wide) 








3 ins. Wide 

72 

60 

54 

51 

45 

42 

39 

(18 Picas Wide) 








3Y ins. Wide 


70 

63 

59 

52 

49 

45 

(21 Picas Wide) 








4 ins. Wide 


80 

70 

68 

60 

56 

52 

(24 Picas Wide) 








4H ins. Wide 





67 

63 

58 

(27 Picas Wide) 








5 ins. Wide 





75 

70 

65 

(30 Picas Wide) 








5 ins. Wide 






77 

72 

(33 Picas Wide) 








6 ins. Wide 







78 

(36 Picas Wide) 


























426 


THE MERCHANTS } MANUAL 


Table XVI gives the number of lines to the inch and num¬ 
ber of words to the line of two and one-half inches. 

Table XVII shows how to make printed copy equal type¬ 
written copy. That is, if copy is to be set in 10 point type, 
two and one-half inches wide, the typewriter line must be set 
at 37 spaces, etc. 

Cooperative Advertising.—Any discussion of retail news¬ 
paper advertising must include a few paragraphs relative to 
the extension of the cooperative idea to retail advertising. 
In general, it takes the form of community advertising with 
the purpose of extending the market for all concerned. 

The plan which originated in Neosho, Missouri, and which 
is generally known as the Neosho plan, is commonly used 
in small towns, and has proved a great success in attracting 
trade from a large radius, much of which had previously gone 
to the large mail order houses. The plan as used in Terre 
Haute aimed at the following: 

1. To attract attention to the town through a series of spe¬ 
cial bargain sales held monthly, year in and year out, until 
they get to be an event in the minds of the people of the 
community. 

2. To convince the buyer of merchandise that the retail men 
in the town are “on the square,” or, in other words, that truth 
in advertising really exists. 

3. That mutually the town man and the country man get 
to know each other and to depend upon each other in such 
a way that the so-called city-limit line exists only on paper 
and not in the minds of the inhabitants of the community. 

The tendency of suburban dwellers to patronize metropoli¬ 
tan stores has led in many cities to the neighborhood stores 
campaign, which has been attended with varying success. 

Outdoor Advertising.—-The dry goods store may use out¬ 
door advertising in three forms, painted display, posters, and 
electric signs. 

1. The painted display. In size, in the use of color, in 
circulation, and in repetition and permanence the painted 
display has certain advantages. Kaufman’s, Pittsburgh, has 
used painted displays for many years with monthly changes 
of copy. L. Bamberger and Company, Newark, has used 



ADVERTISING 


427 


them for institutional publicity. Crowley, Milner and Com¬ 
pany, Detroit, uses bulletins for departmental advertising, 
with monthly changes. 

2. Poster advertising. The advantages of poster advertising 
are much the same as the painted bulletin except that it 
is sold on a monthly basis and the circulation covers the 
boards owned. Copy can be changed much more frequently 
and at less expense. Several department stores use posters 
during December with a Christmas design as copy. James 
A. Hearn and Company, New York City, has done this for 
many years. Frederick Loeser and Company, Brooklyn, has 
used posters for its piano department the year round. 

3. The electric sign. Electric signs can be used only where 
the night circulation is enough to warrant the expense. They 
are, therefore, confined almost exclusively to large cities. The 
Fair in Chicago and R. H. Macy and Company in New York 
have used electric signs consistently. They are, however, 
strictly limited. 

Street Car Advertising.—The benefit of street car adver¬ 
tising to the retail store has been much debated. Some stores 
use them; others do not. Rates vary somewhat but are usually 
in the neighborhood of one dollar per car per month. Con¬ 
tracts are usually made for one year or five years. Cards 
can be changed at the advertiser’s will, it being part of his 
function to supply them. 

There are certain essentials to be observed, according to 
Andrew J. Connolly, advertising manager of the Joseph Horne 
Company, Pittsburgh. The card must be legible from a con¬ 
siderable distance. The colors must stand out in contrast 
and not blend together and become indistinguishable at night. 
The whole effect must catch the eye and make the message 
“get across.” Most cards are weakened by too many words 
and too many ideas. In the art department of a prominent 
street railways advertising company at one time a rule was 
made that no car card should contain more than 52 letters. 

The best use of street car advertising is to implant deeply, by 
repetition, through various states of mind, an idea which will lead 
to ultimate action. One department store found street car adver¬ 
tising highly successful in featuring a brand of men’s clothing, con- 


428 


THE MERCHANTS’ MANUAL 


trolled by the firm under its own label. It wished to extend its men’s 
clothing business without sacrificing any of the high-class business 
which it already held. 

Some stores merely use car cards to keep their name before 
the public as a means of building good will. Others have con¬ 
centrated upon particular departments. 


CHAPTER XXIX 


DISPLAY 

Display is or should be a part of the advertising program. 
The purpose of the display as a means of selling merchandise 
is attained by the same means, that is, attracting attention, 
arousing interest, and creating desire. The planning of the 
display has the same problems to cope with as were discussed 
in the previous chapter under advertising. Therefore, the 
executive direction should proceed from the same source. 

As far as the technique of advertising and display is con¬ 
cerned, there are many differences. In all but the smallest 
stores the functions will be separate, although working in the 
closest cooperation. 

Organization of Display.—Like advertising, display must 
fit the policy of the store, be in harmony with the merchandise 
displayed, suit the requirements of the people passing by, and 
be planned in advance. The first step in planning is the 
written requisition for space made by the department manager 
to the merchandise manager. The latter official confers with 
the display manager, the one bringing to this conference a 
thorough knowledge of the merchandise, and the other a 
knowledge of the technique of display. 

Figure 87 shows the method used by the Burgess-Nash 
Company of Omaha, Nebraska, for planning and keeping 
records of window displays. The position of each window is 
given and provision made for each day in the week. Some 
stores print the advertising value of the window on the requi¬ 
sition blank. 

When a special sale is planned by the Rike-Kumler Com¬ 
pany, of Dayton, Ohio, the merchandise manager calls a meet¬ 
ing of the advertising manager, the display manager, and the 
general superintendent, and asks for suggestions, to be pre¬ 
sented at a later session. The display department prepares 

429 


430 


THE MERCHANTS’ MANUAL 


sketches of window background designs, counter signs and 
show cards. At the second meeting suggestions are discussed 
and approved. Buyers file requests for space directly with 
the merchandise manager who apportions them, thus avoiding 
all argument with buyers. 


_1 



2 

/ 

LXJ 



Entrance^ 

T 


Be 7 

Entrance 


— (Case j I 


S ! 


Seventeenth St 


Fig. 87.—Sample of chart used for planning and keeping record of window 
displays. 


Frequently sales are lost because salespeople are not in¬ 
formed of articles on display. Therefore, a part of the system 
in every store should be to disseminate such information as 
soon as the merchandise is put on display. In the It. H. Macy 



































































DISPLAY 


431 


Company, whenever an article is taken from a department to 
be used in a display, it is briefly described on a card, inserted 
in a jacket and sent by the display manager to the proper 
department head to be hung where all salespeople will be sure 
to see it. Figure 88 illustrates such a bulletin. 



Fig. 88.—Bulletin used for showing salespeople the location of articles dis¬ 
played in windows. 

When merchandise is ready to be removed from the window, 
careful check must be made and care used to see that it is 
returned in as good condition as when received. The J. L. 
Hudson Company of Detroit uses a check system on mer¬ 
chandise delivered to managers, numbered in triplicate in 


















432 


THE MERCHANTS’ MANUAL 


yellow, pink and blue. See Fig. 89. The borrower of mer¬ 
chandise from a department fills out the loan slips, takes 
the blue copy, sends the yellow copy to the publicity director, 
and leaves the pink copy in the department as a record. When 
merchandise is returned, the borrower must get back the pink 
slip corresponding to the blue slip and send both to the pub¬ 
licity director’s office. When the three slips are complete 
they are destroyed, as transaction is considered complete. 



Publicity Division File Copy 

15 „ — 

1 / CASK 

•// / y 

__ ^ 
A~-&' 

Mer/he^aisfeLoan Slip j 

Pi* TMIIR UN IN OR *OV€RT.«.NO | 

•sa* 

A |y OC SC NIPT ION 


V 


if 


/ 

1 ri v 


\T7r 

/ 

1 







































OOOO □ SOILED □ TORN □ 8*0 CONDITION 0 

OUIVIMO or 6IM. TO nrruRNte mv 

mPORTANT 


Fig. 89.—Slip used as memorandum when borrowing merchandise from a 
department. 

Records of different displays should be kept. This is par¬ 
ticularly important when a system of display ideas is carried 
out throughout the year. It not only prevents repetition but 
it may also give valuable ideas. 

Treatment of Window Display.—How a window display 
should be treated is a question which has aroused endless dis¬ 
cussion. It seems generally admitted that each type of mer¬ 
chandise should receive individual treatment if it is to be 
displayed at its best. This includes not only the physical 
aspects of lighting, backgrounds, etc., but also to the more 
delicate questions of atmosphere, price tags, etc. 































DISPLAY 


433 


“Atmosphere is the prime factor in a successful window 
display,” states John H. Beyer, of James McCreery and Com¬ 
pany. He backs up his view by calling attention to the fact 
that people move so rapidly that they rarely take time to stop 
for long periods to inspect a window display unless there is 
something really out of the ordinary to attract their attention. 
He says: “Favorable atmosphere creates interest, interest 
creates demand, and demand creates sales.” 

Price tags are almost invariably omitted from the McCreery 
windows, primarily because it is believed they make the dis¬ 
plays appear too commercial, and secondly because this makes 
it harder to copy styles and prices from tags. 

The views of A. W. Malet, display manager of R. H. Macy 
and Company, are somewhat different. He believes the ques¬ 
tion of price should be decided according to the circumstances 
of the display. As a general rule, price is an asset to a window. 
A small tag does not detract from the appearance of the 
window while it aids those who are looking for the price. 

General opinion seems to favor the price tag unless it is a 
display featuring a general opening, or purely a style exhibi¬ 
tion. That is, it is a question of the merchandise in the 
window and the type of customers who pass by the windows. 
Where the presence or absence of price tags is dependent upon 
outworn tradition the basis is obviously inefficient. 

One expert says that if the store is of the popular or bargain 
type, and price is constantly employed as a dominant appeal 
in personal selling and advertising, then it should be employed 
in display as well. If price is never mentioned in the adver¬ 
tising, it is equally important to keep it out of the windows. 
If the store belongs to the majority of stores catering to the 
average customer, price displays should be governed by the 
idea which it is sought to exploit. 

The so-called unit treatment of window trims has many 
backers, chiefly because of the effect of concentrating the 
selling effort on a definite line of merchandise. The plan is to 
choose one central idea for each window unit and subordinate 
all else to this one thing. If the unit is price, then price is 
predominant. If the unit is color, all else gives way to empha- 
28 


434 


THE MERCHANTS’ MANUAL 


sizing the color; if it is style, everything in the unit harmonizes 
with the style idea. 

According to the unit treatment, the entire display is built 
with one idea in mind. As in the artist’s masterpiece, the 
imagination supplies the unessential lines and details. First 
comes the merchandise, then the setting which will best 
enhance the attractiveness of that merchandise to the public. 

Window display experts sometimes forget, in their desire to 
create an artistic picture, that their displays are aimed solely 
at selling merchandise. Like the advertisement, the window 
fails in its purpose if it merely attracts attention without 
creating that desire for the goods which is necessary for a sale. 

Types of Window Display.—Window displays may be 
divided into two general types: 

1. The direct merchandising appeal, aimed directly at sell¬ 
ing the articles displayed. 

2. The spectacular display which draws attention is aimed 
at creating prestige for the store, but also at getting the 
passer-by into the mood to pay attention to the more prac¬ 
tical displays in other windows. 

The Merchandising Appeal.—The display of notions is one 
of the most difficult problems faced in window trimming be¬ 
cause of the variety of items and the smallness of size. Fur¬ 
thermore, none of the items is intrinsically attractive. Cards 
of buttons, spools of silk, hair pins, etc., have nothing about 
them to attract the customer. 

George J. Cowan advises interesting groupings of the small 
items on panels, the panels to be of any shape desired. By 
arranging the panels in symmetry, character may be given to 
the display. It is, however, difficult to get away from the 
fundamental price-utility appeal. 

While, in emphasizing the merchandising appeal, the articles 
displayed should receive the major portion of attention, the 
setting is important, especially in displaying dress goods. A 
display of beautiful silks may in itself be unimpressive, but 
when coupled with an expensive setting in keeping with the 
fabrics themselves, the silks become extraordinary. 

It is usually more difficult to draw attention to a mer- 


DISPLAY 


435 


chandise display, pure and simple, than to one in which 
“atmosphere” is used. 

The Spectacular Display.—Anything out of the ordinary 
will attract people. Color, motion, lighting, etc., are all 
methods of compelling attention. 

R. H. Macy and Company has put on a great many edu¬ 
cational windows, where the object is to show the amount of 
labor involved in the many processes of manufacturing some 
article of everyday use. Some of these displays have been 
remarkably successful. For example, one display showed the 
making of a hair net which, according to the buyer for the 
notions department, caused an increase of 25 to 30 per cent in 
business. 

Lord and Taylor probably give as much attention to window 
displays as any store in the country. To facilitate window 
dressing, each window has a separate floor which can be 
lowered by hydraulic power to the basement where it is pulled 
across to a track, and wheeled away to be loaded. In this way 
the element of surprise is kept, while, at the same time, the 
display already in use is working, and there is no lost time 
in dressing windows behind drawn blinds. 

Probably the best display policy is that which alternates 
the spectacular with the merchandise appeal. 

Seasonal.—Window displays are particularly susceptible to 
the seasonal appeal. There is something about the ability to 
see the goods at first hand which converts interest into sales. 
An advertisement always labors under the difficulty of keeping 
the desire to buy alive until such time as the prospective 
customer may be brought to the store. The window display 
produces in many cases immediate action. 

A seasonal display has the advantage of accentuating a 
want presumably already existing. A display of sporting 
goods immediately prior to vacation time cannot fail to create 
desire more readily than as though it had been shown at other 
times. The fault of many smaller stores is lack of attention 
to the timely, seasonal factor. Christmas is not the only time 
of year when seasonal displays are valuable. Every week in 
the year can be used to advantage. It is important, of course. 


436 


THE MERCHANTS’ MANUAL 


in making up a seasonal plan throughout the year to see that 
all departments are represented. 

Changing Displays.—Experience has taught that frequent 
changing of windows pays. Once a week is not too often, 
although something depends on the character of the mer¬ 
chandise on display. 

In the past, the small-town merchant believed it was not 
necessary to change window displays so frequently as did stores 
in the city, but it is now generally known that it is even more 
important for the windows in a small town to be changed fre¬ 
quently because of the limited audience. Everybody will 
probably see the window during the course of a week. In a 
large city the floating population makes a constant audience. 

Tests.—The only way to tell definitely the value of a 
particular type of window display is to check results by means 
of tests. Little has been done in the way of scientific testing, 
but what has been done has brought good results. For 
example, tests of show window lighting proved plainly that 
the lighting system is exceedingly important. One large elec¬ 
trical company conducted fifty test periods. The number of 
people who stopped to look at a given display was increased 
from 600 to 4,400 in one hour. 

The proprietor of a leading millinery establishment in Paris 
conducted an interesting series of tests with two windows 
fitted out identically except that one element was different. 
An observer counted all passers-by while another kept track of 
all persons stopping to look at the displays. A third kept 
record by means of a stop-watch of time spent by each person 
in front of displays. Salesclerks kept track of persons refer¬ 
ring to articles in windows. 

One test was in regard to price tags. The percentage of 
frequency was 6.4 where tags were used against 4 without 
price marks. The average time spent in front of the window 
with price tags was 15.2 seconds against 13.4 seconds for the 
other window, an advantage for the price tag window of 13 
per cent. Twenty-six sales were made by the use of tags and 
fourteen through the tagless window, a margin of 86 per cent 
in favor of tags. 

In the second test silver-gray hats alone were displayed in 


DISPLAY 


437 


one window and multi-colored hats in the other window. The 
results were interesting. The one-color display attracted 73 
per cent less passers-by, and held attention for a space of time 
32 per cent less than the multi-colored display, but the one- 
color window made twenty sales against sixteen for the multi¬ 
colored one. 

A third test revealed the fact that changing the hat form 
daily increased sales. A gown displayed on a headless form 
brought more sales than one displayed on a wax figure, prob¬ 
ably because in the former case the interest of the passer-by 
was concentrated on the merchandise. 

While French buying habits may differ from those of Amer¬ 
icans, there is no reason why similar tests cannot be made by 
any merchants desirous of making their window displays as 
effective as possible. 

Factors in Display. —According to Gordon Schonfarber, 
of the Gladding Dry Goods Company, Providence, Rhode 
Island, there are nine principal factors in display: 

1. Harmony, usefulness, beauty. 

2. Order. 

3. Meaning. 

4. Lines. 

5. Surface. 

6. Masses. 

7. Balance. 

8. Color, color harmony. 

9. Optical illusion. 

These nine factors combine to give the effect of the display 
as a whole, to arouse interest, and to concentrate it on the 
merchandise or on the central idea round which the display is 
built. 

The first three points have already been discussed. The 
last six form the technical treatment of the display. 

Lines, Surface and Masses.— An understanding of lines, 
surfaces and masses is essential for correct composition so 
necessary for balance. This is even more important than in 
the case of the newspaper advertisement, because in the 
window the appeal is wholly to the eye ; there being little or no 
text used. 


438 


THE MERCHANTS’ MANUAL 


Horizontal lines give an impression of quiet and rest, espe¬ 
cially if straight and clearly defined. 

Vertical lines, on the contrary, convey a feeling of reliability 
and strength. 

Diagonal or oblique lines indicate movement and action. 

Lines should not be broken too frequently although occa¬ 
sional breaks make the whole more interesting. Gently waving 
lines, according to Mr. Schonfarber, are the most attractive 
of all. 

As far as surfaces are concerned, squares and circles are 
least interesting, circles attracting the eye but not serving to 
retain it. 

Curved figures are more interesting than straight lines^ 
ellipses and ovals being especially pleasing. 

Oblongs and triangles are also good to use. The golden 
section, of which the Greeks were so fond, is an oblong three 
by five in dimensions. 

In considering masses, somewhat the same conditions apply. 
While spheres and cubes are uninteresting, triangles and stars, 
pyramids and cones, are all pleasing. The Greek law of area 
provides the proportion of five to seven to eleven as ideal. 

Backgrounds.—The background serves to unify the effect. 
If the merchandise is to be featured, the simpler the back¬ 
ground can be made and still harmonize with the merchandise, 
the better the composite result will be. 

L. E. Weisgerber, display manager of Lord and Taylor of 
New York, quotes as the essentials of good backgrounds the 
following points: 

1. The background should be unobtrusive. 

2. The background should be such as to make the garments 
in front of it stand out distinctly. 

Where such lines are shown as ready-to-wear, yard goods, 
clothing, millinery, shoes, etc., the background should be 
decorative. Large city stores go to great lengths in obtaining 
decorative backgrounds for such displays, in many cases 
evolving highly original results. The small merchant who 
must be in great measure his own artist can find many valuable 
ideas for backgrounds from illustrations and cover designs in 


DISPLAY 


439 


some of the current fashion magazines and women’s periodicals. 

Interchangeable posts and panels provide possibilities for 
quick changes at little expense. 

Seasonal backgrounds are always in order and particularly 
valuable when the merchandise to be displayed is of a seasonal 
character as well. It should be remembered that the back¬ 
ground of the window is like the back curtain of the theatre. 
It provides atmosphere without interfering with the players, 
or, in the case of the window, with the merchandise. 

The color of the background is all-important. A white 
background intensifies colored objects on display. A gray 
background contrasts or neutralizes colored objects on display, 
yhe degree depends on the depth of tone or hue. A black back¬ 
ground weakens or negatives colored objects of merchandise. 
As a general rule, the backgrounds should be grayer, softer, or 
less intense than objects shown against them. 

Color.—The first necessity in considering color is to see 
that the effect of the sun’s rays upon the display windows does 
not nullify the results of carefully planned color effects. One 
method of correcting this frequently occurring condition is to 
use light backgrounds, although this does not remove the 
trouble entirely. It has been suggested that covering the under 
side of the awning with a dark green lining would have a 
beneficial effect. 

Plate glass windows are manufactured which will do away 
with the reflection of the rays of the sun on merchandise. Such 
windows, however, have been regarded as impracticable be¬ 
cause of their great expense and the fact that they are made 
of glass which curves inwards at the top and bottom, thus 
taking up a great deal of the window space. They are also 
hard to keep clean, dust settling on the inner convex surface of 
the glass in a surprising degree and in a very short time. 

The use of color in window display work is exceptionally 
important because of the effect of color in attracting attention. 
To get the best results from color it is necessary to know 
something of the methods by which colors may be harmonized 
and contrasted. 

The major harmonies are as follows: 


440 


THE MERCHANTS’ MANUAL 


1. Monochromatic. Different tones of one color are com¬ 
bined, such as French blue and Navy blue. 

2. Analogous. Two colors next each other in the spectrum 
may be combined, such as blue and green. 

3. Complementary. Colors opposite each other in the 
chromatic circle (see Fig. 90) are complementary. 

4. Triadic. The combination of two analogous colors with 
an opposite color, such as yellow and green combined with 
purple. 



( Women's Wear) 

Fig. 90. (Color Chart)—This chromatic circle, showing the warm, cold and 
complementary colors, can be used in making good combinations of two or 
more colors. Such combinations should have their members at least 80 
degrees removed from each other and triads (combinations of three colors) 
must have at least two members selected from among the warm colors. 

There are three qualities for each color—hue, intensity, and 
value. Colors may be normal, or tints, in which case they are 
lighter than normal, or shades, in which they are darker. 

The following table, published by the National Retail 
Clothier, shows two color combinations which give excellent, 
good, strong, fair, poor, and very poor combinations. 






DISPLAY 


The following are colors which 
make excellent combinations: 
Orange red with yellow. 

Violet with yellow. 

Violet with yeHow-green. 
Violet with green-yellow. 

The following make good com¬ 
binations : 

Scarlet and turquoise. 

Violet with orange-red. 

Violet with orange. 

Violet with blue-green. 
Turquoise with orange. 

Orange with blue-green. 
Orange-yellow with purple. 
Yellow with purple. 
Green-yellow with purple. 

The following make strong 
combinations: 

Normal-red with blue-green. 
Normal-red with green. 

Scarlet with green-yellow. 
Purple with normal-green. 

The following make fair com¬ 
binations : 

Orange-red with purple. 
Orange-red with yellow-green. 
Orange-red with green-yellow. 


441 

Orange-yellow with turquoise. 
Orange with green. 

Scarlet with green. 

Normal-red with green-yellow. 
Purple with blue-green. 

The following make poor com¬ 
binations : 

Yellow with normal-red. 

Yellow with scarlet. 

Yellow with turquoise. 
Yellow-green with purple. 
Normal-green with scarlet. ' 
Normal-green with orange-red. 
The following make very poor 
combinations: 

Blue with blue-green. 
Blue-green with yellow. 
Blue-green with green. 
Blue-green with yellow-green. 
Blue-green with turquoise. 
Normal-green with turquoise. 
Turquoise with green-yellow. 
Green with orange-yellow. 
Orange with purple. 

Violet with normal red. 

Violet with scarlet. 

Red (of any kind) with pink. 


The six accompanying rules will help in carrying out color 
combinations in making the trims: 

1. Contrasts of two colors or graded shades of one color are 
correct. 

2. Dark colors should be used below light ones; never above. 

3. Never use more than three colors in one scheme. 

4. Use light colors in dark places. 

5. Use soft shades where the permanent colorings of the 
store itself are pronounced. 

6. Never put two floral designs near each other. 

While colors cannot be said to have a language, it is true 
that certain colors can be used very effectively in carrying out 
certain ideas. For example: 

Red denotes passion, fire, excitability. At the same time it 
tends to reduce the apparent size of the display. 


442 


THE MERCHANTS’ MANUAL 


Blue is almost the direct opposite of red, being cold and 
formal, and requiring a warm color to set it off. At the same 
time it increases the apparent size of the display. It is inter¬ 
esting to note that men generally prefer blue while women 
choose red. 

Violet, which is the combination of blue and red, denotes 
royalty, solemnity, and distance. 

Yellow, which has twelve times the light-carrying power of 
purple or violet, conveys an idea of motion, joy, gayety and 
speed. 

Green, the combination of blue and yellow, is restful, cheer¬ 
ful, and comfortable. 

Cool colors, the blue, greens, and purples, should predominate 
in spring and summer, while warm colors, the reds, oranges 
and yellows, should be used mainly in winter months. 

All pastel shades go together. 

If it is necessary to put two articles in the window which 
do not harmonize, the effect can be neutralized by placing 
something gray or tan between them. 

The color of the goods on display has a very important 
effect on the artificial lighting. The lighter the general effect, 
the less light will be required. The following table will give 
some indication of the wide range in light required by different 
colors: 


Dark blue reflects 6% per cent of light falling upon it. 


Dark green 10 

Pale red 16 

Dark yellow 20 

Pale blue 30 

Pale yellow 40 

Pale green 46% 

Pale orange 55 

Pale white 70 


Properties.—Window decorations and fixtures can be 
bought, rented, or made in the store’s own workroom. Together 
with the background they form the stage setting for the dis¬ 
play, and should, therefore, be selected with the greatest care 
in order that they may harmonize with the merchandise and 
background. 


DISPLAY 


443 


The small store will find it in many cases advantageous to 
buy its decorations already made up, even though the cost 
may be a trifle more. The finished appearance of decorations 
and properties made by professionals will more than make 
up for the difference in expense. 

Cleanliness.— Dust on window displays is fatal to effec¬ 
tiveness. Only a trifle less harmful is dirt on the show 
window pane. The first can be avoided by frequent changing 
of displays and careful cleaning of window space each time. 
The latter is a question of attention to a few simple rules. 

For example, windows should not be washed when the sun 
is shining on the glass, because this causes streakiness. Grit 
in the water will scratch the glass and mar its polish. If water 
is hard a few drops of ammonia should be used to soften it. 
Bon Ami or other polisher can be used for the outside if it is 
thought desirable. Inside, however, cleaning should be done 
with tissue paper. Cloth is apt to leave lint on the glass, while 
soap leaves streaks which it requires much rubbing to remove. 

The ordinary method of cleaning is to use a long-handled 
brush, working from the top, and before the window is dry 
using a rubber squeegee or mop. 

Window and Show Cards.— The window display without 
the help of window cards must depend for its efficacy on the 
skill which the window dresser has shown in arranging mer¬ 
chandise. Where the idea aimed at is the attracting attention 
rather than selling goods, window cards are sometimes omitted. 
But since the great majority of windows are dressed with the 
express purpose of selling goods, the window cards become 
an important and essential feature. 

Cards are in the nature of headlines, giving the essential 
features of the display in a flash, and in many cases carrying 
a statement of price, since this is a question the majority of 
customers are interested in. 

Cards are equally important within the store, especially on 
bargain lots of merchandise, where much time is saved for the 
salesperson through sufficient and adequate placing of cards. 

A prominent display man’s advice in regard to window 
cards is excerpted from the Twin City Commercial Bulletin: 

The layout or arrangement of words is as important .as the 


444 


THE MERCHANTS’ MANUAL 


correct formation of the letters. Accurate spelling is essential. 
Phrasing must be selected with great care. Any mistakes in 
grammar will inevitably reflect on the store. 

The phrasing of window cards should tell the passer-by 
something about the merchandise which will interest her at 
first glance. Therefore, the placing of the cards is important. 
Placing window cards tightly against the glass is a mistake. 
They should be set back in such a way as to harmonize with 
the general effect of the window trim. Each card should be 
set out separately from stands, figures, or drapes. A card 
should never be stood up against a well-gowned figure. 

One popular method of placing cards is to stand them in 
front of a small “T” stand away from any other part of the 
display. 

As far as interior cards are concerned, it is not good policy 
to have a great many mixed sizes on one counter. Uniform 
sizes are better. In all cases they should be kept clean, and 
type should be of uniform size and style. 

Colored carboard and letters may be used to carry out the 
general color scheme of the window trim. Black letters on a 
white background, however, are best for general purposes. 

Cards in windows and in the store should be carefully 
coordinated to secure the maximum selling effect. 

Counter Displays.— Much of what has been said in regard 
to window display refers to counter display, especially since 
the glass show cases have become almost universal. There 
are some differences, mainly due to the fact that the displays 
may be left for a longer interval. 

Bulky displays are generally to be discouraged, as they do 
not aid in selling as much as a judicious assortment in small 
quantities. Carrying out the unit idea in counter and table 
display has proved very effective. For example, Marshall 
Field and Company, in their undergarment department, show 
only one garment of a kind on each table and keep all displays 
small and neat, replenishing them as frequently as necessary. 


CHAPTER XXX 


SALES AND SELLING PROBLEMS 

Sales Fundamentals. —Sales may be divided into two 
classes: 

1. Incidental. 

2. Seasonal. 

Incidental sales may result from the buyer’s acumen in 
careful purchasing or a mistake in judgment on his part, lead¬ 
ing to overstocking of a particular line. They may also come 
about as the result of business expansion or business stimula¬ 
tion caused by the action of competitors. 

The incidental sale occurs as a rule when the necessity for 
it occurs. The seasonal sale, which is usually a yearly occa¬ 
sion, has an advantage in that preparations may be made 
months in advance for staging it successfully. 

No matter what the occasion of the sale, there are certain 
points which must be decided upon definitely before making 
further plans: 

1. The idea back of the sale must be clear. 

2. The number of days the sale will continue must be 
known. 

3. The time for the opening announcement must be set. 

4. The number of departments to be represented must be 
decided upon. 

5. The question of time limits to sale of merchandise in¬ 
cluded in the sale should be discussed. 

When these points have been decided upon, there are cer¬ 
tain elements which will bring about the success of the sale. 
According to A. W. Shafer, advertising manager of L. Klein, 
Inc., of Chicago, these are: 

1. A distinctive “reason why” name. 

2. Merchandise to back it up. 

3. Unusual values. 

4. Proper window display. 


445 


446 


THE MERCHANTS' MANUAL 


A MERCHANDISING CALENDAR THAT 

SHOWS THE “HIGH SPOTS” OF 1919 

The following calendar has been prepared as a handy reference to show just 
when each of the 12 apparel departments (including piece goods) hit the “high spots” 
during the fiscal year of 1919. 

In the calendar appear only those weeks when unusual activity occurred in one 
or several of the departments. It is intended to serve as a reminder during the year 
of 1920 of the approximate periods during which big business may be expected in each 
department, if last year’s experience repeats itself. 

DATE 

ACTIVE DEPARTMENTS 

Week of January 5 

Coats 

“ “ January 12 

Piece goods 

Undergarments 

“ “ March 3 

Piece Goods 

“ “ April 1 

Piece Goods 

Waists 

Suits 

Coats 

“ “ April 7 

Millinery 

“ “ April 14 

Gloves 

“ ‘ May 26 

Millinery 

“ “ June 2 

Dresses , 

Skirts 

• “ June 9 

Piece goods 

Waists 

Neckwear 

U ndergarments 

“ “ July 14 

Sweaters 

“ “ Sept. 15 

Millinery 

“ “ Oct. 20 

Piece goods 

Gloves 

“ “ Nov. 3 

Suits 

Coats 

“ “ Nov. 10 

Millinery 

“ “ Nov. 24 

Furs 

“ “ Dec. 8 

Gloves 

Neckwear 

“ “ Dec. 15 

U ndergarments 

“ “ Dec. 27 

Dresses 

It will be observed that February and August are the only two months in the 
year in which activity in none of the 12 departments rises to any considerable height, 
which probably accounts for the fact that these two months are favorite furniture 
sale and housefurnishing months in the department stores. 


Fig. 91.—Merchandising calendar. 


























SALES AND SELLING PROBLEMS 


447 


5. Good advertising. 

6. Interior display. 

7. Salespeople’s enthusiasm. 

8. Planning. 

Seasons and Sales. —Of the factors affecting sales, the 
seasonal aspect is greatest in importance. Nearly every arti¬ 
cle sold by the store is subject to fairly definite seasonal fluc- 



(Women's Wear) 

Fig. 92.—Chart showing how the public bought undergarments and skirts 
during 1919 in the leading stores of New York City. 

tuations. In style articles this fluctuation is very great, while 
in staple departments it is much less. 

Figure 91 shows a merchandising calendar prepared by 
Women’s Wear, indicating the peaks of demand for each 
type of goods sold. There are no seasonal peaks in February 
and August. This fact is responsible for the attention paid 
such departments as furniture and housefurnishings during 
those months. 
























448 


THE MERCHANTS ’ MANUAL 


Figure 92 shows the seasonal demand for undergarments 
and skirts during 1919 in the leading stores of New York City, 
as charted by Women’s Wear. There is a peak in May, a 
slight one in August, and a dominant one just before Christ¬ 
mas in undergarments. The demand for skirts is active chiefly 
in spring. 

The importance of such charts of selling activity lies in the 
fact that the greater the demand, the less pressure has to be 
brought to bear to induce the public to buy. 

The Anniversary Sale.—A store’s birthday has always 
been considered a legitimate opportunity for offering a special 
sale to the public. One of the most successful plans for this 
type of sale is to have a number of articles priced at figures 
indicating the number of years the store has been in existence. 
For example, if a store has been operating for fifty years, then 
a 50-cent sale would be possible, the articles sold being priced 
at 50 cents, $1.50, $2.50, $3.50, etc. Figures representative of 
the age of the store may be used extensively in the store 
decorations, window displays, and in any special advertising 
prepared for the event. 

A common device is to link the history of the store with 
the history of the community. Any community takes pride 
in the development of itself and its institutions. There should 
be reference to conditions as they were when the store was 
founded. While, in general, historical references are not advis¬ 
able, they are always welcomed on such an occasion as this. 
Thus it is possible to display the form of earlier advertise¬ 
ments, or compare the style of the merchandise of earlier days 
with the styles of today. If the store can obtain photographs 
of local buildings, streets, etc., taken at the time the store was 
founded, or during its early days, and place these in the show 
windows with descriptions, much interest may be aroused. 

Several stores have made it part of the anniversary program 
to provide music. The golden anniversary of the Wanamaker 
store in Philadelphia is probably the classic example of what 
can be secured in the way of anniversary publicity. 

It is not necessary that a store should be old in order to 
make a success of its anniversary sale, as is witnessed by the 


SALES AND SELLING PROBLEMS 


449 


eighth anniversary program of the Kaufman and Baer store 
of Pittsburgh. Ten days before the sale commenced all mer¬ 
chandise for the first week was in the marking room. Floor- 
men were told of the sale two weeks in advance. The Thurs¬ 
day before the sale employees’ enthusiasm was secured by a 
special meeting with speeches, songs, and refreshments. 

Publicity for the sale was secured first of all by a teaser 
billboard and newspaper campaign. Secondly, a four-page 
rotogravure bulletin was mailed to 100,000 people in Pitts¬ 
burgh and suburbs featuring the store and its surroundings, 
and containing an announcement of the sale. Thirdly, a four- 
page, double-truck advertisement in the Sunday paper com¬ 
pleted outside publicity. 

Openings.—Spring and fall openings are regular events in 
many stores. The usual feature of such an occasion is the 
fashion show in which most of the local merchants cooperate. 
A good press agent who can write not only news articles, but 
also descriptive material on color schemes, decorations, 
women’s apparel, etc., is necessary. He should begin by run¬ 
ning short news articles in all newspapers, first announcing 
dates, and then the further particulars of new designs and 
fashions. 

Contests of various kinds may be used to stimulate interest. 
A common expedient is a poster contest with an appropriate 
prize. The exhibition of the competing posters is also an 
attractive feature in the display advertising. 

Window display contests among the stores may also be ar¬ 
ranged. Special lighting and decorations on the streets also 
serve to call the public’s attention to the opening. 

A parade of living models is always an important drawing 
card. If this is not possible, moving pictures of fashion shows 
may be obtained. 

Buyers for departments affected by the fashion show 
usually are against any announcement to the public of an 
opening sale until it can no longer be deferred. They argue 
that every woman in the city stops buying in their depart¬ 
ments until after or during the fashion show. Thus two or 
three weeks is usually the limit for advance announcements. 

29 


450 


THE MERCHANTS’ MANUAL 


Bargains.—The selling of bargain merchandise has passed 
through three distinct phases, all of which are still in 
operation: 

1. The bargain table in the store aisle. 

2. The bargain basement under control of upper-floor 
buyers. 

3. The bargain basement as a separate merchandising 
organization. 

It was found out comparatively early in retail merchan¬ 
dising that goods prominently displayed on tables in aisles 
where traffic was heavy succeeded in disposing of a great deal 
of merchandise. The aisle table is still extensively used and 
with profit, but there are certain factors which tend to dis¬ 
courage its use too widely. 

In the first place, the bargain table is claimed by some to 
hurt sales in neighboring departments, not only through actual 
loss of sales at the time, but also because the bargain atmos¬ 
phere lent by aisle tables tends to discourage customers desir¬ 
ing to make quality purchases. 

Modern fixtures provide ample room and space for display 
without the use of tables. 

The proper function of tables seems to be for sales where 
the store wishes to give as much bargain atmosphere as pos¬ 
sible. It is also felt by many stores that aisle tables on a 
main passageway are excellent means of disposing of certain 
types of merchandise. Some stores rent table space to the 
different departments desiring to dispose of merchandise at 
bargain prices. 

The original bargain basement was created for the purpose 
of clearing out old stock, remnants, unsatisfactory purchases, 
damaged and soiled goods, and any which could not be sold 
on the upper floors and which had to be got rid of at any 
price. Stocks were displayed under the worst possible con¬ 
ditions, and the cheapest selling help obtainable was employed. 

The next step in the evolution of the bargain basement was 
special purchases for basement sales made by buyers for the 
upper floors. But it was soon found impossible to make the 
basement a success merely as a clearing house of old goods. 
Therefore, stores began to make the basement a separate mer- 


SALES AND SELLING PROBLEMS 


451 


chandising activity with its own staff of buyers. The aim is 
always to dispose of merchandise at the lowest price and the 
best quality obtainable. Marshall Field and Company of 
Chicago and the Emporium of San Francisco run complete 
basement stores, the former carrying a full line of goods. 

Buying for the bargain basement requires exceptionally 
keen judgment and the ability to make quick decisions. It 
also requires a knowledge of merchandising values above the 
average, since the margin of profit is smaller and the turnover 
must be very rapid to secure profits. 

According to Mr. Niswonger, of the Emporium, the net 
profit in a bargain basement should be about 7 per cent 
of the sales. This can be attained only by the highest type 
of efficient buying and by rapid turnover. One of the most 
ordinary devices in bargain basements is the automatic reduc¬ 
tion, which secures new stock at the end of a certain period 
as a result of following the system. The ordinary form of the 
plan is as follows: 

1. After 12 selling days, goods reduced 25 per cent. 

2. After 18 selling days, goods reduced 50 per cent. 

3. After 24 selling days, goods reduced 75 per cent. 

4. After 30 selling days, goods given away. 

Under such a system the stock must turn over at least once 
a month, and since the store does not make any profit unless 
goods are sold during the first twelve days, the actual turn¬ 
over is much more rapid. 

Edward A. Filene describes the reception of the automatic 
bargain basement plan in Boston, where it was originated by 
the Wm. Filene’s Sons Company, as follows: 

In the first months of business we lost over $20,000 a month 
because the people waited, under that inducement, for the first, 
second, or third mark-down. But after two or three months they 
found that if they waited the goods were not there when they came 
for the first reduction. On the average we sell goods at the first price 
we make because our buyers have learned that they cannot buy, to 
make a profit, except they buy cheaply enough to make the customers 
sure that they are getting extraordinary value at the first price. 

The majority of stores operating bargain basements allow 
customers the same privileges in the way of free deliveries, 


452 


THE MERCHANTS’ MANUAL 


elevator service, charges, C.O.D’s, etc., as on the upper floors. 
In general, however, free alterations are not permitted. Bar¬ 
gain basements are generally advertised, the average per¬ 
centage of money spent for this purpose being about 4.6 per 
cent. In general, the larger the store, the higher the per¬ 
centage of basement sales is to the total business. 

In an investigation conducted by the National Retail Dry 
Goods Association, the average mark-up for basement mer¬ 
chandise was found to be 37 per cent. Table XXIII shows 
in detail merchandise data disclosed by this survey, arranged 
by volume of business, as to percentage of mark-up, gross 
profit, purchase discount, mark-down, inventory shrinkage, 
sales per square foot, and average sale. 

It is interesting to note that the store with the largest vol¬ 
ume of sales had a mark-up of only 31.8 per cent. 

Table XXII shows more detailed information for a single 
store by departments. 

The highest mark-downs were in haberdashery, knit under¬ 
wear, negligees and infants’ wear. The lowest were in cor¬ 
sets, skirts, misses’ coats, millinery and dresses. Inventory 
shrinkage shows a wide range. The stock turn varies with 
the type of merchandise, the seasonal articles in general having 
a higher turn than the staples. 

Table XVIII shows the distribution of basement expense, 
classified according to the standardized plan of the Control¬ 
lers’ Congress of the National Retail Dry Goods Association. 

The highest cost of doing business was 31.5 and the lowest 
17.5, while the average was approximately 25 per cent. 

Sales by Departments.—It is difficult to make any exact 
statement as to what percentage the sales in each depart¬ 
ment should be of those of the whole store. In the first place 
it is difficult because of the fact that two stores rarely carry 
the same lines throughout, and in the second place because of 
the widely different methods of classifying merchandise now 
in use. Lastly, in some stores the selling effort, either because 
of policy or because of special interest on the part of the 
owner, is directed towards some particular department, with 


SALES AND SELLING PROBLEMS 


453 











































454 


THE MERCHANTS’ MANUAL 


Table XIX. —Comparison of Amount of Business Done by 
Departments in Four Stores 


Percentage of Total Business 

Done 

in Each 

Department, Jan. 1, 

1921, to 

Jan. 1 

, 1922 


, STORE 

No. 1 

No. 2 

No. 3 

No. 4 

Art Embroidery. 

... 2.34 

2.40 

5.00 

2.30 

Blankets, Comforts, etc. 

... 4.17 

2.90 

1.10 

2.70 

Barber Shop. 

... 0.19 




Beauty Parlor. 

... 0.55 




Books. 

... 2.36 

3.40 

0.60 


Cameras. 


1.90 



Candy. 




0.80 

Carpets, Rugs. 

... 4.82 



3.90 

China, Glassware. 

... 2.47 

1.50 

0.80 

2.70 

Clothing (Men’s). 

... 3.43 

3.00 

3.00 

5.60 

Clothing (Boys’). 

... 1.16 

2.30 

2.00 


Coats (Women’s). 

... 5.48 

7.00 

3.50 


Coats, Dresses (Girls’).... 


4.10 

1.10 


Contract. 




0.20 

Corsets, Brassieres. 

.. 2.52 

2.70 

1.50 

2.30 

Cotton Sheets, Pillow Cases.... 





Draperies. 





Dresses (Women’s). 


5.10 

4.40 


Dress Goods (Wool, etc.). 

... 5.35 

2.20 

0.80 

1.60 

Dress Trimmings. 

... 2.87 

4.30 


1.00 

Embroideries, Laces. 



1.40 


Furniture. 




Furs. 


2.70 

1.80 


Gloves (Women’s and Girls’).... 

... 1.04 

1.60 

1.30 

2.50 

Hair Goods. 




0.50 

Handkerchiefs. 


4.50 

0.70 

Hats (Men’s).... 



0.40 


Holiday Goods. 



0.40 

Hosiery (Women’s). 

.. 5.02 

4.50 

2.70 

5.00 

Hosiery (Men’s)... 




Housefumishings. . . . 


2.70 

1.90 

1.00 

Infants’ Wear. 


2 80 

1.20 

2.90 

Jewelry. 


1.30 

0.80 

1.20 

Knit Underwear (Women’s). 


2.40 

1.00 

1.50 

Laces. 


5.60 

Lamps, Shades. 


2.60 



Leather Goods. . 


3.70 

1.00 


Linens. 


2.80 

1.40 

1.90 











































SALES AND SELLING PROBLEMS 


455 


Table XIX. —Continued 


Percentage of Total Business 

Done 

in Each 

Department, Jan. 1, 1921, to Jan. 1 

, 1922 


STORE 

No. 1 

No. 2 

No. 3 

No. 4 

Linings. 

. 3.45 


0.40 

1.70 

Lunch Room Emp. 

. 0.29 




Men’s Furnishings. 

. 3.61 

2.90 

4.10 

7.30 

Millinery. 

. 2.10 

5.30 

2.20 

4.90 

Muslin Underwear. 

. 2.53 

3.10 

1.80 

2.20 

Neckwear. 

. 1.45 

4 40 

0.70 

1.20 

Negligees. 


5.50 

7.70 


Notions. 


5.70 

1.50 


Optical Goods. 

. 0.19 




Patterns. 

. 0.48 

3.50 

0.30 

0.10 

Pictures and Mirrors. 

. 0.45 




Pianos and Talking Machines. 

. 3.12 



3.10 

Restaurant. 

. 6.12 




Ribbons. 

. 1.06 

5.70 

0.80 

0.70 

Ready-to-wear. 




12.40 

Shoes (Men’s)... 

. 0.63 

2.40 

0.50 


Shoes (Women’s). 

. 7.05 

2.70 

3.70 

2.30 

Shoes (Children’s). 


2.70 



Silks and Velvets. 

. 5.35 

4.10 

2.80 

4.10 

Silverware. 

. 0.74 

1.60 



Stationery. 


3.70 

1.00 


Suits, Coats, Dresses, etc. (Misses’). 


6.70 



Suits (Women’s). 


5.80 

2.60 


Skirts (Women’s). 


8.20 

0.80 


Sweaters (Women’s). 


5.00 

1.00 


Toilet Goods. 

. 1.77 

3.20 

1.70 

1.70 

Toys, Baby Carriages, etc. 

. 2.65 

3.10 

1.30 

0.90 

Trunks and Bags. 


2.00 

0.50 

0.10 

Upholstery. 




3.30 

Veilings. 


8.10 



Wall Paper. 




3.70 

Waists. 

. 1.47 

4.80 

2.60 

1.70 

Wash Goods, Flannels, etc. 


6.00 

2.30 

2.10 

Entire Store (average). 

. 2.56 

3.30 

1.77 







































456 THE MERCHANTS’ MANUAL 


Table XX—Summary of Sales Statistics 


Departments 

No. of 
Sales 

Average 

Sales 

Am’t of 
Sales per 
Sq. Ft. 

No. of 
Sales per 
Sq. Ft. 

TToiisp Furnishings . 

76,540 

2.11 

34.27 

16 

Optical. 

5,106 

3.88 

53.02 

13 

Candy . 

62,375 

.31 

109.13 

347 

Millinery Trimmings 




Music. 

5,231 

6,015 

12.25 

37.68 

3 

Cleansing. 

.52 

40.61 

78 

Yarns. . 

65,965 

1.43 

161.54 

113 

Stamping 


Fur Storage. 

916 

11.20 

160.47 

14 

Pianos. 


Fabric Gloves. 

67,823 

8,901 

1.02 

182.88 

120 

Men’s Shoes. 

3.94 

55.91 

14 

Shoeshine Parlor. 

10,119 

.10 

16.38 

158 


the result that this department shows an abnormal percentage 
of sales in proportion to the others. 

Table XIX, prepared by the Dry Goods Economist, shows 
the percentage of total business done in each department of 
four stores of varying size. No. 1 does a business of less than 
$1,000,000 annually; No. 2 does about $1,500,000; No. 3 be¬ 
tween $3,000,000 and $4,000,000, and No. 4 about $10,000,000. 
There seems little uniformity. In fact, the table is more 
noteworthy for the lack of any basis of comparison than it is 
for anything else. 

The National Retail Dry Goods Association has gone so far 
as to make up a series of sales statistics showing number of 
sales in each department, the average sale, the amount of 
sales per square foot, and the number of sales per square 
foot. See Table XX. 

Dealer Helps.—It is impossible to offer any definite reply 
to the problem of whether dealer helps should or should not 
be used. The policies of the individual differ, and the type of 
dealer help varies with the concerns sending them out. In 
every case it depends upon the particular problems on hand. 
























SALES AND SELLING PROBLEMS 


457 


National Retail Dry Goods Association 
Bureau of Research and Information 
200 Fifth Avenue, New York, N. Y. 


Table XXI.— Sales Statistics for 1919 


Departments 

No. of 
Sales 

Average 

Sales 

Am’t of 
Sales per 
Sq. ft. 

No. of 
Sales per 
Sq. Ft. 

Silks. 

46,604 

S3.71 

$148.10 

40 

Colored Dress Goods. 

20,467 

6.20 

79.72 

13 

Wash Dress Goods and Flannels. 

62,291 

1.66 

72.45 

43 

Kid Gloves. 

50,158 

2.20 

182.88 

120 

Handkerchiefs. 

83,547 

.87 

137.29 

158 

Women’s Neckwear. 

38,122 

1.19 

110.39 

92 

Laces and Hamburg. 

37,710 

.80 

88.69 

111 

Hosiery. 

99,659 

1.35 

142.23 

105 

Knit Underwear. 

100,409 

1.63 

184.61 

109 

Ribbons. 

139,162 

.57 

109.06 

162 

Small wares.■. 

250,815 

.31 

206.94 

674 

Linings. 

40,219 

1.77 

137.59 

77 

Dress Trimmings and Braids.... 

33,378 

.88 

176.44 

201 

Suits. 

7,312 

32.72 

61.87 

2 

Coats. 

10,323 

30.58 

111.11 

7 

Cotton Dresses. 

21,468 

2.91 

37.25 

13 

Infants’ Wear. 

46,877 

2.34 

51.05 

22 

Muslin Underwear. 

80,370 

2.16 

55.84 

26 

Silk Waists. 

21,288 

4.65 

63.13 

20 

Corsets. 

65,721 

2.44 

94.97 

39 

Art Goods. 

226,607 

.66 

100.38 

152 

Umbrellas. 

16,294 

3.34 

199.65 

60 

Table Linens and Towels. 

75,576 

1.69 

63.39 

46 

Patterns. 

29,352 

.13 

22.08 

98 

Boys’ Clothing. 

36,776 

5.65 

61.02 

11 

Women’s Shoes. 

66,965 

4.24 

84.77 

20 

Upholstery. 

49,421 

3.06 

33.68 

11 

Jewelry. 

34,858 

1.04 

59.31 

57 

Trimmed Millinery. 

110,277 

3.77 

55.51 

19 

Men’s Furnishings. 

72,097 

1.96 

110.88 

57 

Leather Goods. 

23,965 

2.21 

78.89 

36 

Soda Grill. 

339,202 

.24 

54.17 

222 

Furs. 

2,365 

39.25 

52.85 

1 









































458 


THE MERCHANTS MANUAL 


Table XXI. —Sales Statistics for 1919 .—Continued 


Departments 

No. of 
Sales 

Average 

Sales 

Am’t of 
Sales per 
Sq. Ft. 

No. of 
Sales pei 
Sq. Ft. 

Toys. 

1 

35,095 

1.83 

38.84 

21 

Books. 

12,778 

.93 

119.20 

109 

Girls’ Wear. 

22,223 

4.70T 

65.15 

16 

Men’s-Boys’ Hats. 

5,153 

2.55 

35.90 

14 

Men’s Clothing. 

17,362 

15.32 

97.51 

6 

Wall Paper. 

14,427 

2.25 

19.60 

6 

Velvets. 

10,568 

3.05 

92.84 

15 

Black Dress Goods. 

5,190 

5.26 

160.80 

31 

Veilings.. 

37,674 

.57 

112.90 

196 

Men’s Underwear and Hosiery. . 

53,780 

1.75 

141.72 

81 

Hair Goods. 

24,575 

1.04 

23.72 

23 

Stationery. 

44,202 

.57 

49.95 

88 

Toilet Goods. 

133,023 

.65 

259.87 

399 

Trunks and Bags. 

14,582 

3.26 

34.35 

8 

Buttons. 

28,253 

.48 

99.03 

205 

Aprons. 

24,501 

1.81 

125.34 

69 

Junior Girls’ Wear. 

8,234 

7.44 

73.90 

10 

Children’s Shoes. 

38,730 

2.28 

61.22 

27 

Art Linens. 

14,328 

2.26 

109.42 

48 

Skirts. 

8,317 

7.10 

36.91 

5 

Untrimmed Millinery. 





Children’s Millinery. 





Lamps and China. 

51,028 

2.72 

20.41 

6 

Cotton Waists. 

36,802 

2.31 

63.13 

20 

Kimonas and Bath Robes. 

10,478 

3.55 

48.37 

14 

Sweaters, Shawls, Bathing Suits.. 

10,943 

3.39 

88.47 

26 

Petticoats. 

26,288 

2.68 

48.38 

18 

Floor Coverings. 

16,740 

7.59 

21.99 

3 

Lace Curtains. 

12,336 

7.91 

66.87 

8 

Shell Goods. 

18,919 

.51 

53.54 

105 

Cottons. 

59,698 

2.84 

130.34 

46 

Blankets, Spreads, Comforters. . 

17,574 

4.95 

76.67 

16 

Clocks. 

4,305 

3.58 

151.21 

42 

Costumes. 

11,143 

19.39 

95.48. 

5 

Boys’ Furnishings. 

64,070 

1.42 

70.17 

49 

Sewing Machines. 

3,256 

4.81 

42.37 

7 

Silverware. 

34,240 

2.59 

446.65 

178 

Shoe Findings. 

21,291 

.44 

52.15 

118 

Upholstery Contract. 

2,124 

3.49 

12.86 

4 



















































Table XXII. —Merchandise Data, 1920, Reported by a Store Having Basement Sales of $4,500,000 


SALES AND SELLING PROBLEMS 


459 














































Table XXIII.— Merchandise Data (Figured on Bargain Basement Gross Sales) 


460 


THE MERCHANTS’ MANUAL 


Average 

Sale 

2.42 

2.70 

0.69 

2.50 

Sales per 
Square 
Foot 

23.70 

56.48 

20.45 

Times 

Stock 

Turned 

4.4 

4.2 

2.7 

3.0 

5.2 

3.5 

2.1 

4.0 

4.3 

Per Cent 

Inventory 

Shrinkage 

5.1 

1.5 

0.8 

3.8 

13.7 

Per Cent 
Mark¬ 
down 

9.5 

6.1 

7.8 

17.0 

0.6 

1.0 

14.0 

Per Cent 
Purchase 
Discount 

2.2 

1.5 

2.1 

1.3 

2.0 

Per Cent 
Gross 
Profit 

22.3 
28.0 
31.0 

30.3 
35.5 

24.0 

18.12 

37.0 

12.0 

Per Cent 
Mark-up 

33.4 
40.0 
35.0 
38.9 

40.5 

31.7 

38.0 

39.0 

46.0 

Gross Sales 
in 

Bargain Basement, 1920 

$500,000 

Store 13. 

Store 15. 

Store 18. 

Store 19. 

Store 23. 

$250,000 

Store 20. 

Store 24. 

Less than $250,000 

Store 25. 

Store 30. 

Store 32. 

Store 33. 





















































Table XXIII. —Merchandise Data (Figured on Bargain Basement Gross Sales) 


SALES AND SELLING PROBLEMS 


461 









































462 


THE MERCHANTS’ MANUAL 


The commodity may be one which is nationally known, and 
where there is little attempt at substituting unknown mer¬ 
chandise. In cases of this sort, the advertisements of the 
manufacturers, if carefully planned and executed, are accept¬ 
able. The case of one manufacturer is pertinent. This con¬ 
cern has made a phenomenal success in the veiling field and 
their displays are shown in almost every store handling their 
product. On the other hand, where a commodity is less well 
known, and where there is keener competition among several 
makes, or where a store may substitute its own brand, the 
success of dealer helps, no matter how beautifully designed, 
is limited. 

The use of dealer helps in particular departments may de¬ 
pend a great deal on the class of merchandise the store is 
interested in pushing. Almost every store has a separate and 
individual opinion as to how dealer helps should be used. 

One factor in the acceptance of a display will be its adapta¬ 
bility to the store interior. The ultimate decision will always 
depend on the policy of the store. 

Lost Sales.—One of the simplest methods of testing selling 
efficiency is to analyze reasons for lost sales, and to see 
whether they were lost because of the store’s fault in not 
having proper merchandise, the salesperson’s fault in not 
selling properly, or whether the losses were unavoidable. 

It is quite likely that results will differ materially in differ¬ 
ent stores. For example, the results of an analysis of 200 sales 

Lost Sales 


Indifference of salespeople. 47 

Attempts at substitution. 18 

Slow deliveries . 18 

Errors. 18 

Over-insistence of salespeople. 17 

Insolence of employees. 16 

Unnecessary delays in service. 13 

Tactless handling of customers. 11 

Bad arrangement of stock. 9 

Ignorance of goods by salespeople. 6 

Refusal to exchange purchases.-. 4 

Poor quality of goods. 1 

Total. 200 
















SALES AND SELLING PROBLEMS 


463 


failures by a New York department store given in the pre¬ 
ceding table may not apply in another case. 

Practically all of the reasons for lost sales were avoidable 
or at least reducible. The astonishing prominence of the 
lack of interest by salespeople in selling would seem to indi¬ 
cate the store had not found the correct solution of the prob¬ 
lem of remunerating its selling help to secure 100 per cent 
cooperation. 

Another store made a careful analysis, taking a department 
as a unit. A form sheet was used with four columns, headed 
Time, Salesperson’s Number, Amount of Sale if Sold and 
Reason for Losing Sale. Time was noted each half hour by 
the inspector at the wrapping desk. Under Amount of Sales 
if Sold the sale of more than one article was noted. Every 
customer entering the department had to appear on the sheet 
whether sold or not. 

Each day during the tests the results were taken up with 
the salespeople and much individual work was done where 
weaknesses were discovered. Thus whereas on the first day 
but 55.1 per cent of the customers coming into the department 
were sold, on the last day of the test 94.2 per cent of the 
customers were sold. 

Still another store conducted a survey of the negligee and 
shoe departments to determine the percentage of customers 
sold. These two departments were selected because the negli¬ 
gee department is a strictly non-traffic section, while the shoe 
department is directly on the traffic line. Slips were given to 
salespeople with spaces on which were entered sales, custom¬ 
ers looking, customers already waited on, and customers 
directed to other departments. 

Customers not falling into any of the above four classifica¬ 
tions were counted as lost and in each such case the reason 
for the loss of the sale was given. Customers looking were 
added to lost sales on the theory that as sales possibilities they 
should have been sold. Results arrived at were as follows: 

During one month, 6,838 people were approached by sales¬ 
people in the negligee department; 3,177 sales were made, 
1,280 were directed to other departments, 894 had already 


464 


THE MERCHANTS ’ MANUAL 


been waited on and 1,183 were “looking.” The actual number 
of customers who left the department unsuited was 304. Per¬ 
centage of sales made was 68.1 against 31.9 lost. 

In the shoe department, 9,533 customers were approached 
during one month. The number of sales made was 4,498; 
1,636 customers were directed to other departments, 745 had 
already been waited on, 847 were “looking” and 1,422 were 
frankly unsuited. The percentages show that 47 per cent 
of the customers were sold and 53 per cent not sold. 

Selling by Telephone.—Customers have always used the 
telephone as a means of ordering merchandise, but the practice 
is relatively infrequent of the store’s using the telephone to 
increase its business. In general, the opinion has been held 
that the customer should be brought to the store in order that 
she may purchase other articles while looking for a specific 
need. This is sound theory and sound practice as well, but 
there are many sales which it is possible to make over the 
telephone, and which would never be made under other cir¬ 
cumstances. 

The requisites for such a sales campaign are a carefully 
made up list of regular and prospective customers, specially 
trained order-takers, prompt deliveries, and careful selection 
of merchandise. Part of the list is telephoned each day 
according to a prearranged schedule. Care is taken to avoid 
calling up when the customer is likely to be busy. 

Some stores which have tried out this idea are enthusiastic 
in its favor. 

Discounts.—Discounts were granted originally to enlist the 
good will of certain classes of people whose daily duties brought 
them in touch with the purchasing public, and whose good will 
therefore became an active asset to the stores from whom the 
bounty was received. The concession was extended to others, 
and, as time passed on, it became badly misused. 

There is no valid reason why dressmakers, clergymen, pro¬ 
fessional people and employees of other stores should receive 
such discounts. The system is expensive in that it requires 
the identification of those demanding the reduction, while 
persons may get it directly or indirectly who are not entitled 



SALES AND SELLING PROBLEMS 


465 


to it. It has become the practice of many dressmakers to 
purchase cloth, trimmings, etc., for members of their own 
family and even for other people whom they want to serve, 
while they often sell such goods at a profit which rightfully 
belongs to the retailer. 

It is difficult for any one merchant to discontinue the prac¬ 
tice of discounts without causing serious complaints from cus¬ 
tomers and a loss of trade. But if all local stores adopt a 
uniform policy against the giving of discounts, such complaints 
are reduced to a minimum. The tendency today is strongly 
towards the elimination of discounts. One association has had 
the following agreement in faithful operation for several years: 

We, the undersigned members of the.Merchants’ 

Association, hereby agree and pledge ourselves to discontinue abso¬ 
lutely the giving of discounts on the retail sales of all merchandise 
of every description in our respective stores, to any person or per¬ 
sons, excepting employees of our own stores, who shall be entitled to 
a discount of 10 per cent on goods purchased for their own personal 
use. 

In some cities a discount of 6 per cent is customary, while 
in New York, Chicago, and St. Louis 10 per cent is the pre¬ 
vailing concession. 

For firms finding it impolitic to abolish dressmaker’s dis¬ 
counts entirely it is desirable to require dressmakers to present 
discount cards when purchasing. These cards should be issued 
only after a careful scrutiny of the dressmaker’s business by 
the local merchants’ association. 

Gift Certificates.—Certificates, bonds or merchandise or¬ 
ders are issued by many stores at the Christmas holiday 
season, both as a convenience to customers and as a means of 
increasing trade. The purpose is to give them in place of gifts 
in order that the recipient may pick out his or her own choice. 
The donor is freed of the trouble of picking out individual 
gifts which may or may not prove satisfactory. 

The certificate, naturally, is limited to the city where the 
issuing store is located and cannot be used for out-of-town 
gifts. 

Gift certificates are generally colored green to give the im- 

30 



466 


THE MERCHANTS' MANUAL 


pression of currency, and to provide a holiday atmosphere 
appropriate in a Christmas gift. 

Premium and Trading Stamps.—Among the many ques¬ 
tions of sales and merchandising operation coming up for 
decision is that of premium and trading stamps. Merchants 
are generally opposed to them on principle because of the 
added expense of doing business without any return. The 
hold of the trading stamp with the public lies in the belief 
that it is getting something for nothing. It fails to see 
that the stores must charge more for the goods in order 
to pay for the premium service. Where all stores give 
stamps there is obviously no advantage to any of the stores. 
In any case it is a fundamentally unsound merchandising 
principle, because it does not lead to making customers regular 
customers, and can never take the place of other forms of 
publicity. The use of trading stamps is today obsolescent. 
In New York City it is virtually obsolete among department 
stores. 

Many stores, while seeing the fundamental unsoundness of 
the principle, adopted the practice to hold their trade in com¬ 
petition with stores giving trading stamps. Any attempt to 
pass laws forbidding trading stamps is met with decisions in 
the courts declaring such laws unconstitutional as depriving 
a citizen of his property without due process of law. Cam¬ 
paigns against trading stamps, therefore, have usually taken 
the following forms: 

1. The adoption of an individual premium scheme by the 
merchant. 

2. Building a spirit against stamps throughout the trade by 
means of resolutions at conventions. 

3. Local newspaper advertising by individual merchants or 
groups of merchants pointing out the expense and other dis¬ 
advantages of the trading stamps. 

4. Trade paper opposition. 

5. Mutual agreement. 

It has been predicted that the practice of giving trading 
stamps will eventually dwindle to small proportions through 
the effect of competition, and the recognition by the stores 
that it is impossible to pay the necessary percentage to the 


SALES AND SELLING PROBLEMS 


467 


stamp companies and still offer the same values in merchandise 
as before. 

The best method, as in the case of discounts, is for united 
action on the part of local merchants. Such was the case in 
Providence, Rhode Island, where leading merchants agreed 
not to give trading stamps. 


CHAPTER XXXI 


SALES DIRECT BY MAIL 

The high cost of present day advertising in desirable 
media has made many retailers question whether direct mail 
cannot profitably strengthen and supplement the present 
sources of appeal. There are three factors which make such 
a result possible: 

1. It is possible to offer merchandise to the public without 
informing competitors at the same time. A direct mail an¬ 
nouncement may offer an overstocked line without fear of 
attracting immediate price-cutting from other stores. 

2. It is possible to address small definite classes of people 
in a personal manner. With a well-analyzed list, it should 
be possible to get maximum results in the majority of in¬ 
stances, because it is making a direct appeal to people who 
are likely to be interested in the very merchandise you give 
publicity to. 

3. The expenditure for the mailing list is wholly controlled 
by results. The size of the mailing list and the character of 
the publicity will make up the cost. 

There is a distinction between Mail Order and Direct Mail. 
The latter is primarily to get the customer interested to such 
a degree that she will come into the store to buy—the purpose 
of the former is to get the order and money by mail. The 
first not only makes a sale but builds good will at the same 
time. 

Organization of Mail Advertising Department.—The 

organization necessary for the department will depend wholly 
on the purpose for which the direct mail advertising is con¬ 
ducted. Is it a convenience for customers, or is it a definite 
part of the publicity program of the store and used as a busi¬ 
ness builder? Figure 93 shows the organization of a direct 
mail department, under the head of the publicity director, 

468 


SALES DIRECT BY MAIL 


469 


and quite distinct from the newspaper advertising department 
or of the mail order department. In many direct mail depart¬ 
ments, however, the mail order work is made a subsidiary 
activity. 

The case of the mail order department is somewhat different. 
Figure 94 shows the organization plan of a large New York 



Fig. 93.—Organization of a direct-mail department. 


specialty store doing a mail order business of about $2,000,000 
per annum. Comparison of the activities of these two depart¬ 
ments shows that the mail advertising department’s activities 
are chiefly directed towards the make-up of the catalogue and 
methods of distribution. This particular mail order house 
caters to a small select trade, and the mail order policy is that 
any customer may obtain just as good a gown by mail as 
though she were to come into the store herself. The same 
merchandise in this store is sent by mail as is sold in the 
























470 


THE MERCHANTS’ MANUAL 


regular departments. It has been found that the matter of 
fitting mail order patrons is difficult, returns often being as 
high as 50 per cent. 

The plan followed by Altman’s is in contrast to the above, 
and in many ways novel. The sixth floor is given over to 
merchandise advertised in catalogues, folders, etc., sent by 
mail direct to customers. It was found much simpler to con¬ 
centrate such merchandise on one floor for the convenience of 
customers who preferred to come to the store rather than have 
the merchandise sent by mail. This catalogue store works in¬ 
dependently of the rest of the store in the same way that the 
bargain basement is usually treated. That is, the merchandise 



Fig. 94.—Organization of a mail advertising department. 

is quite separate from that carried in regular departments. 
The character of the merchandise conforms to mail order 
requirements of standardized lines at moderate prices. Only 
catalogued articles are carried. 

Planning.—Before deciding on media of publicity, or line 
of goods to be offered, or any other factor connected with 
the mail order campaign, a preliminary analysis of conditions 
should be made. The following list of twenty-five questions 
found by one advertising specialist most helpful in analyzing 
problems of direct retail advertising is quoted by Robert E. 
Ramsay in the Dry Goods Economist: 

1. What is the nature of the merchandise to be sold? That is, is it 
old or new; utility or luxury; seasonable or not; and what is the unit 
of sale and the margin of profit? 

2. What selling points or features are there about this merchandise 






















SALES DIRECT BY MAIL 471 

which will interest buyers? Patented or not. Novelty or specialty? 
Staple or accessory? 

3. What competitive direct advertising has already been issued to 
our prospects? 

4. Where are the possible buyers located? City or country; large 
or small towns? Class of city or country—as mill town, or suburban 
city? 

5. Who are the possible buyers? Men, women, or children? 

6. What kind of people are these possible buyers? Refined or other¬ 
wise? Studious or superficial? Limited or broadly educated? Technical 
or professional? 

7. To what kind of an appeal do you think they will respond? 
Dignified or bizarre? Humorous or scientific? Flash or subdued? 
Colorful or conservative? Economical or snobbish? 

8. What is the financial or social standing of our prospects? 

9. Whom are they buying for? Self? Husband? Wife? Child? 
Parent? 

10. What is their annual income or budget for buying such goods as 
we offer? 

11. Where will our direct advertising be received? Office or home? 

12. When will it be received? Hour? Day? Week? Month? 
Season? Event? 

13. Who will open and read this appeal? Proprietor or clerk? 
Housewife or private secretary? 

14. By what light will it be read? Daylight or artificial? 

15. How will it be handled? Clean or soiled hands? Dainty fingers 
or rough ones? 

16. How long will the piece be expected to appeal? Casual observa¬ 
tion or continuous and close study? 

17. What can be invested in the unit or the campaign with all 
returns considered? 

18. What is the aim of the unit? Sales, inquiries, good will, sup¬ 
plementary to other advertising? 

19. How will it be individualized? That is, how made personal, 
the keynote of direct advertising success? Name? Business? Sex? 
Geographical? Fraternal? 

20. What will probably be the physical classification of direct adver¬ 
tising used? Letters—form, personal, printed, or novel? Catalogues— 
booklets, bulletins, portfolios, almanacs, house organs, mailing cards, 
blotters, enclosures, coupons, package inserts, broadsides, poster stamps, 
folders, photographs, novelties, or samples. 

21. What will be the method of the appeal? Copy, illustration, dis¬ 
play, paper? If copy, long or short, technical or general? If paper, 
high, medium, or low-grade? 

22. How many appeals will be made and when will they follow? 
Monthly? Weekly? Daily? By seasons. 


472 


THE MERCHANTS’ MANUAL 


23. What kind of an envelope or other container will carry the 
appeal? Size, shape, copy? 

- 24. What kind of a return card, order blank, or other “come back” 

will be included? 

25. Will it be possible to make a trial or test mailing to a small list 
prior to making a mailing to the complete list? With letters, most 
frequently used by retailers, this is easily possible, and highly profitable. 

MAILING LISTS 

Sources.—The mailing list is the basis of all direct-by-mail 
publicity. On it depends the efficiency of the whole campaign. 
Hence the list cannot be given too careful consideration. It 
is necessary to decide just what type of customer is desired 
upon the list. The common types may be classified into three 
groups as follows: 

1. Prospects. 

2. Partial Buyers. 

3. Total Buyers. 

There are many ways of getting such a list. In the first 
place the names of prospects may be bought outright. Lists 
purchased from agencies should be bought with the proviso 
that all mailings returned be credited by the mailing agency 
to the purchaser. It frequently occurs that a great percentage 
of the pieces come back “not found” or “wrong address” and 
this name is a dead loss in postage and stationery. It is much 
more desirable to build up lists from sources in your own 
establishment if possible. A list of prospects may also be 
obtained from local directories and tax lists. By noting a 
man’s occupation something can be ascertained of his buying 
power and the possibility of his using the store’s goods. 

Perhaps the best way is to take the names of the store’s 
customers as a nucleus. The question may be raised of why 
customers already had by the store should be taken. The 
reason is that the buying habits of people are constantly 
changing. If all the people who purchase now at the store 
continued to buy there from all lines carried, there would be 
little need to worry about competition. As it is, however, it 
is constantly necessary to stimulate buying interest, and the 
percentage of people who buy habitually from one store may 
be materially increased through the intelligent use of mailing 


SALES DIRECT BY MAIL 


473 


lists. Direct mail will help to minimize that competition 
which is experienced by the stores that do only newspaper 
advertising and stop at that. It places one store in the lead 
by selling its personality in personal publicity. 

One store, which has made a very careful survey of the 
direct mail problem, advocates centralizing responsibility for 
the mailing lists and mechanical equipment under the adver¬ 
tising manager, supervised by the sales promotion manager, 
instead of under the publicity manager. It has given much 
thought to the sources of its mailing lists and endorses the 
following as being most effective: 

Charge Account and Cash Customers (In town and out of town) 
Special: 

List of Infants and Children: 

Obtained from: 

Birth Register. 

Infants’ Department. 

Children’s Shoe Department. 

Barber Shop—Register. 

List of Boys: 

Obtained from: 

Y. M. C. A. 

Boy Scouts. 

Boys’ Department. 

Barber Shop—Register. 

List of Girls: 

Obtained from: 

Junior Department. 

Schools. 

Girl Scouts. 

Y. W. C. A. 

List of Men: 

Obtained from: 

Golf List—Obtained from Golf Clubs. 

Chauffeur List—Obtained from Social Register. 

Sent to owners of cars. 

Sporting and Vacation List: 

Work up list of men who go hunting or go away for 
vacation annually. 

University List: 

Faculty and Students. 


474 


THE MERCHANTS’ MANUAL 


Young Men Attending Out-of-town Schools: 

General Men’s and Young Men’s List. 

Used for general announcements. 

Obtained from Department Records. 

Y. M. C. A. 

Engineers’ Club. 

Sources mentioned above. 

List of Women: 

Stout List. 

Compiled from all departments handling stout wear. 

Mothers’ Lists. 

Mothers of infants compiled in infants’ department and 
from birth registration or birth notices. 

Mothers of School Children. 

Compiled from School Records. 

Young Women’s List. 

Compiled from 
Y. W. C. A. 

High School. 

Clubs. 

Women Who Go to Winter and Summer Resorts: 

Compiled through society editors of newspapers and what¬ 
ever sources possible. 

Prominent Women: 

Compiled from 
Social Register. 

College Women’s Club. 

All Women’s Clubs. 

Maids’ List: 

Used to Sell Maids’ Uniforms to Employers. 

Compiled from social register and exclusive clubs. 

Nurses’ Lists: 

Compiled from hospital lists. 

General Women’s List. 

Used for general announcements, and compiled by combin¬ 
ing the lists above. 

In the investigation made by the National Retail Dry Goods 
Association, member stores located in cities from three quar¬ 
ters of a million up to two million in population reported lists 
compiled from credit, charge, and delivery records, from men’s 
and women’s clubs, and addresses of good cash customers 
gathered through the salespeople in the various departments. 
Some stores have found it worth while to have blanks 




SALES DIRECT BY MAIL 


475 


printed with spaces for names and addresses and records of 
purchases. The blanks are distributed to salespeople, and 
they are told to go after names. One store, to offer them a 
real incentive, gave a prize to the salesperson who got the most 
names. Another store follows the practice of having a large 
book just inside the main entrance of the store, where custom¬ 
ers are requested to record their names and addresses. Other 
methods of securing names are to save all alteration tags and 
parcel post addresses, and to write on the large last page of 
the shipping books, “Hand this book when filled to the man¬ 
ager: it contains valuable addresses.” 

Classification.—Lists may be classified according to the 
types of customers, or perhaps according to geographical loca¬ 
tion. These names may be filed away on index cards in alpha¬ 
betical order. 

Carson, Pirie, Scott and Company, Chicago, recommend that 
the name of each customer should be typewritten on a separate 
card with the address and the list of important purchases with 
dates. Different colored cards are used for each division, as, 
for example: 

White Card—Country customers. 

Yellow Card—Young women who are always looking for 
new styles in hosiery, neckwear, waists, etc. 

Red Cards—Women who have children to clothe. 

Other colors for wives of shop men, mechanics, railroad 
men or day laborers. 

This idea may be elaborated almost indefinitely. The ad¬ 
vantage is that the cards may be filed alphabetically and the 
different colors picked out whenever it is desired to address 
a certain class. The cards are filed in a cabinet, a separate 
drawer being used for customers and non-customers. 

A card system such as this furnishes the means of inter¬ 
preting and classifying the mailing list to the best possible 
advantage. Policies differ, but the National Retail Dry Goods 
Association found that lists were generally highly classified, 
eliminating residents who represented both economic extremes. 
There was a consensus of opinion that efforts were best con¬ 
centrated on the middle and upper classes. 

The larger stores find it more economical to use stencils 


476 


THE MERCHANTS' MANUAL 


than cards. In this way much time and money is saved which 
is lost in addressing from cards. First, the names must be 
transcribed onto the cards and then written or typed from the 
cards. In making stencils, the transfer (after the stencil is 
made) is instantaneous and always assures a good, clear, 
attractive address. Where lists are small, and the time element 
does not enter so largely as with the big establishments, it 
would be more economical to use cards. 

The method employed with cards to distinguish various 
groups, i.e., to use different colored card board for each group, 
is paralleled with the stencils by using different colored tabs. 

Keeping Up Lists.—The mailing list should be revised 
frequently, at least once a month. Names of prospects who 
have died or moved away should be removed as soon as 
possible. 

Removals and deaths may be determined in many cases 
from letters returned to the store because the person cannot 
be located. The postal regulation which provides that third 
class mail may be returned if sender guarantees to forward 
postage to cover same, is of some help in keeping mailing 
lists up-to-date. 

The Use of Mailing Lists.—The appeal through circulars, 
letters, package, and envelope stuffers is chiefly made with 
a view to sell the organization and induce people to come to 
the store rather than to have them shop by mail. Selling the 
store is one of the main functions of direct mail. But whether 
the store conducts a mail order business or not, the use of 
the mailing list is the same. 

Some merchants have found a profitable, yet little appre¬ 
ciated, field for direct advertising among foreign born pros¬ 
pects. It is true that when they first arrive in this country 
their purchases are often of the cheapest goods, but as they 
adopt American ideas, they dress better and are anxious to 
look prosperous. They place more stress on loyalty in buying 
than any other class. They are ordinarily flattered when they 
receive a letter and, although perhaps not able to read it 
themselves, have a friend translate it. 

Carson, Pirie, Scott and Company believe it is the personal 
work that brings attention to the store. Attention is, there- 


SALES DIRECT BY MAIL 


477 


fore, focused on customers who buy frequently, since they 
have more money to spend and are always interested in styles. 

The use of the mailing lists and their division into new 
classifications is a constant problem for the one in charge, on 
his or her ingenuity depending in great measure the success 
of the direct mail advertising. 

Media of Direct Mail Advertising.—Direct advertising, 
to use Mr. Ramsay’s authoritative classification, may be 
divided into subdivisions under two main heads, first the 
conventional or standardized form usually requiring an en¬ 
velope for mailing, and second the unconventional or auto- 
contained, which are generally used without an envelope. 

The conventional forms are: 

1. Letters. 

a. Personal. 

b. Form. 

c. Printed. 

d. Novel. 

2. Catalogues. 

a. Regular. 

b. Loose leaf. 

c. Miniature. 

3. Booklets. 

4. Bulletins. 

5. Portfolios. 

6. Almanacs. 

7. House organs. 

The unconventional forms are: 

1. Mailing slips or cards. 

2. Blotters. 

3. Enclosures. 

4. Coupons. 

5. Package inserts. 

6. Broadsides. 

7. Poster stamps. 

8. Folders. 

9. Photographic reproductions. 

10. Novelties, samples, etc. 

A great deal of the success of the mailing effort depends on 
the careful choice of the media used. 


478 


THE MERCHANTS’ MANUAL 


The Letter.— Personal letters cannot ordinarily be used for 
advertising purposes due to the expense of getting them out. 
Personal letters can be used in small and frequent mailings. 
Of course quantity mailings require form letters, but the small 
town merchant will find it most profitable to keep the personal 
element alive in all his overtures to his prospects. For small 
mailings, therefore, the form letter is used, and for large mail¬ 
ings the printed letter. Novel letters usually have some 
special feature to distinguish them from the ordinary letter 
such as die-cut openings, etc. 

Form letters may be prepared by means of either the multi¬ 
graph or the mimeograph. Fill-ins may be made with an 
addressing machine. In any event it pays to have the best 
mechanical equipment obtainable for all forms of mailing. 

Occasions for letters are almost innumerable. The aim is 
ordinarily to arouse interest and create personal contact rather 
than to sell any particular goods or quote prices. The con¬ 
tents of the letter must be specific and prepared with the same 
care which would be given to the make-up of an advertise¬ 
ment. The opening paragraph, particularly, should be studied 
with a view to ensuring interested reading on the part of the 
prospect. 

Letters should be sent under two-cent postage. In many 
cases letters with one-cent stamps go into the waste basket 
without being looked at. If the letter is worth the amount 
expended on it, it is worth spending every effort to secure 
attention for it. 

Catalogues.—If a store conducts a mail order department, 
it may be wise to issue a catalogue. The chief factor to be 
considered is that the mail order houses are able to issue a 
catalogue so much larger and more complete that the retailer’s 
effort appears poor in comparison. Therefore the retailer 
conducting a mail order business must rely on the timeliness 
of his merchandise to secure orders. The value of the cata¬ 
logue to him will be in listing staple articles, and, even in that 
event, it will be necessary to issue new catalogues frequently. 

The A. T. Lewis and Son Dry Goods Company, of Denver, 
makes a point of talking fresh stocks, new styles and up-to- 


SALES DIRECT BY MAIL 


479 


the-minute fashions and prices in its mail order business. With 
that end in view the catalogue has been done away with in 
favor of other types of direct-mail publicity. On the order 
form the following notice is printed: 

We discontinued the publication of a general catalogue some years 
ago because we wanted to give the out-of-town customer the same 
“up-to-the-minute” merchandise which we give city customers, and 
each mail order sent to Lewis and Son is filled from the very latest 
shipments to be found in the store and not from stock which must, 
of necessity, be put away for the filling of mail orders where a general 
catalogue is sent out. When you order at Lewis’ you get the same 
fresh, new stock the Denver customers are shown. 

If a store does think it advisable to issue a catalogue, it 
should be planned and made up with the idea in mind that 
it will be compared with the catalogues of the large mail order 
houses, and, to stand this comparison favorably, it must sub¬ 
stitute quality for the bulk of the mail house catalogue. Fur¬ 
thermore, the prices must match the mail order house prices. 

Booklets.—The booklet is peculiar in that it must contain 
items of such interest that the reader will be induced to pre¬ 
serve it. The booklet is mainly used by the manufacturers. 
Few retailers use it except on special occasions when it is felt 
that the expense is justified. The souvenir booklet is some¬ 
times made up for extra-special occasions. Some stores find 
it pays to enclose with the goods a pamphlet regarding use 
of the goods. These booklets may or may not be furnished 
by the manufacturer. 

Special announcements of style may be prepared for con¬ 
venience in booklet form. Booklets may also be prepared for 
articles of large unit value, such as pianos, victrolas, furniture, 
etc. 

Bulletins.—The bulletin takes the place of the catalogue in 
many stores. It enables the store in the shortest space of 
time after the receipt of merchandise to have the information 
in the hands of the customer. 

The A. T. Lewis and Son Dry Goods Company of Denver 
sends out the biggest mailing at Christmas season, mailed the 
latter part of November, in the form of a bulletin. It is a 


480 


THE MERCHANTS 7 MANUAL 


sheet measuring 24 by 38 inches, folded to make sixteen pages. 
All items are known to be good sellers or else judged to be so 
by experts. The items are described in the most careful man¬ 
ner, each one being pictured, just as is done by the big mail 
order houses. 

Portfolios and almanacs are not used to any great extent by 
retailers. In the former case the unit must be large to warrant 
the expense, while in the latter case almanacs have gone out 
of style. 

Unconventional Forms.—It is usually assumed that to be 
novel is certain to arouse interest. This, of course, is true to a 
certain extent. But a thing is novel only so long as everybody 
else is not doing it. Therefore, one of the first problems which 
the retailer must solve in deciding upon the media of direct 
advertising best suited to his needs is to study the methods 
employed by competitors. 

The unconventional forms of direct advertising are used 
mainly for educational or good will purposes. The aim is to 
sell the institution rather than any specific merchandise. There 
is an exception, however, in the case of samples, but samples 
are possible to use in relatively few instances. 

Technical Details.—One of the greatest wastes in direct 
mail advertising is neglect of details which will determine 
whether or not a folder or circular will receive a hearing. The 
results of a questionnaire mailed by System to about one 
thousand experts in direct mail methods are exceedingly inter¬ 
esting in this connection. The summary of replies was as 
follows: 

1. What has been your experience with a typewritten envelope ad¬ 
dress as compared with a handwritten address? 

The handwritten address is better. 3 

The typewritten address is better. 114 

2. Does the color of ink used in the letter affect the returns? 

Yes. 42 

No. 17 

3. Is the use of two colors of ink in the letter advantageous? 

Yes. 21 

No. 59 








SALES DIRECT BY MAIL 


481 


4. Is the use of good paper more profitable than the use of cheap 

paper? 

Yes.81 

No. 12 

5. How does the color of paper affect results? 


White paper is best.46 

Colored paper pays well. 6 

Paper color makes no difference. 2 


6. Does a handwritten signature pay better than a mechanically 
prepared signature? 

Yes. 118 

No. 22 

Some of the comments as to these various points are in¬ 
structive. J. B. Mills, publicity director of the J. L. Hudson 
Company, says in regard to typewritten versus hand-ad- 
dressed envelopes: 

It depends entirely upon the appeal. Letters telling of certain kinds 
of merchandise used on strictly business stationery should at all times 
carry a typewritten address. With letters on stationery which 
appeals to women, although the message may be typewritten, we 
believe that sometimes the handwritten address gets the better 
attention. 

The question as to color of ink to be used was more nearly 
balanced in answers than many of the other questions. Al¬ 
though two-thirds thought the color made no difference the 
other one-third was of the opinion that an unusual color of ink 
attracted and held attention better. 

The choice of paper, type, color of stock and style should 
be determined in each individual case by the character of the 
merchandise to be exploited as well as the individuals to which 
the appeal is to be presented. 

Paper.—The quality of paper used in direct mail adver¬ 
tising is important. It conveys an impression to the recipient 
just as powerful if not more so than the make-up and typog¬ 
raphy. The Shepard Stores find that mailings on high-grade 
bond paper produce 100 per cent better results than those on 
cheaper grades. 

The following table, prepared by Amos Parrish, shows the 
types of paper best for specific uses: 

31 









482 


THE MERCHANTS’ MANUAL 


A Table Telling of Some of the Best Papers for Certain Uses 


Here paper is grouped by finish only (i. e., newsprint, S. & S. C., 
coated, plate, etc.) 


Kind of Appeal 

Paper to be Used 

Kind of Cut 

Institutional 

Antique 

Zinc etching 

Package stuffers 

S. & S. C. or antique 

Zinc or halftone 

Store stationery and 
sales letters 

Bond—plate or antique 
finish or laid 


Catalogues 

S. & S. C., antique, or 
coated 

Zinc or half:one 

Store newspaper 

Newsprint 

Zincs or very coarse 
screened halftones 

Store placards 

Enamel blank, ripple or 
antique double thick 
cover paper 

Zinc or halftone 

Furniture 

Antique or dull coated 

Zinc or halftone 

Victrolas 

Antique or dull coated 

Zinc or halftone 

Fabrics—Silks 

Plate or dull coated 

Zinc or halftone 

—Cottons 

Antique 

Zinc 

—Woolens 

Antique or laid 

Zinc 

Lingerie 

Plate, antique or laid 

Zinc or halftone 

Baby wear 

Antique or laid (in light 
blue or pink or buff 
tint) 

Zinc 

Linens 

Antique or laid 

Zinc 

Women’s fashions 

Antique or dull coated 

Zinc or halftone 

Men’s wear 

Antique 

Zinc 


Note: Should halftones be desired in any place that zincs are indicated 
it will be necessary to change the kind of stock used to either S. & S. C., 
coated or plate finish paper. 


Printing papers may be procured in the following forms: 

1. Bookpapers. 

Newsprint, used for newspapers, broadsides, handbills, etc. 
Machine finished paper, used for catalogues, or inexpensive booklets. 
S. & S. C. book paper, higher gloss than machine finished paper. 
Plate paper, high class book paper, used for fine engraving, and 
printing from steel and copper plates. 

Coated paper, with enameled, glossy surface, used for halftones, 
not desirable for type. 













SALES DIRECT BY MAIL 483 

Antique paper, sometimes called wove. Uneven surface, soft, 
resembling blotting paper. Uses line cuts. 

Laid paper. Similar to antique but with addition of lines run¬ 
ning through grain. 

2. Cover papers. 

Plate finish, antique, ripple, and crash. Used for covers of 
pamphlets, booklets, price lists, etc. Made in many shades and 
weights. 

3. Cardboards. 

Bristol Board. Used for store placards, business, and mailing cards. 
Enamel blanks. Used for similar purposes. 

4. Miscellaneous papers. 

Blotting paper. 

Hand made paper, imported. Usually with very rough finish. 
Etc. 

Paper may be secured in a variety of tints which allows 
artistic treatment of the subject. Browns for Fall use, greens 
for Spring, etc., are often employed. A deckled edge is some¬ 
times considered to add to the richness of the effect. 













SECTION VI 


PERSONNEL 












CHAPTER XXXII 


SOURCES AND SELECTION OF PERSONNEL 

Personnel administration, according to Tead and Metcalf,* 
is defined as the 

direction and coordination of human relations of any organization 
with a view to getting the maximum necessary production with a 
minimum of effort and friction, and the proper regard for the 
genuine well-being of the workers. 

In less technical language, personnel administration repre¬ 
sents the system of recruiting and training employees, stand¬ 
ardizing their working conditions on a fair and equitable basis, 
assisting the management in securing from them the maximum 
degree of loyalty and efficiency, and securing for the employee 
a square deal. 

The Personnel Department.—The personnel department 
is a permanent part of all progressive department stores. 
Although a comparatively new development, it has amply 
demonstrated its value in the following ways: 

1. A department store demands a higher grade of personnel 
control in the sense that perhaps a more delicate and con¬ 
tinuous adjustment of work relationship and working con¬ 
ditions is required. 

2. Personal appearance and contact in a department store 
are of primary importance. Effective merchandising and 
effective advertising would mean nothing if the saleswomen, 
the department heads, the floor managers, and other service 
employees were not at all times in a proper attitude towards 
the public and could not translate that attitude into skillful 
salesmanship and good service. 

3. Department store operations are largely dependent upon 
successful personal relationships. 

♦Tead and Metcalf “Personnel Administration, Its Principle and 
Practice.” McGraw-Hill Book Co. 

487 


488 


THE MERCHANTS' MANUAL 


Layout.—One of the first requirements for an efficient em¬ 
ployment department is an efficient office layout. Figure 95 
shows the office layout for the employment division of Jordan 
Marsh Company of Boston. In this case men and women 
applicants are received in separate rooms as conveniently 
located as possible with reference to entrance and exits and to 
the arrangement of the rest of the department. Provision is 
made for private offices for various department officials, 
clerical help is concentrated, and training and class rooms are 
grouped in the rear. 

Organization.—Often the organization of the various divi¬ 
sions of the personnel department is under different execu¬ 
tives. The employment manager may be responsible to the 
general manager, the educational director may be responsible 
to the superintendent. Such an arrangement brings confusion, 
waste, and lack of proper coordination. 

A director of personnel should be at the head of all personnel 
activities, reporting to the superintendent or the general man¬ 
ager, as the case may be. The majority of personnel depart¬ 
ments are responsible to the superintendent. Figure 96 
shows the organization plan of the personnel department of 
James McCreery and Company of New York. Such a plan is 
applicable to an organization of any size, the degree to which 
the functions are individualized being limited by the policy of 
the store, and somewhat by its size. 

There are five main divisions of personnel work to be con¬ 
sidered, no matter how the responsibility for carrying them 
out is divided. 

1. Employment. 

2. Training and Education. 

3. Health and Safety. 

4. Rating and Records. 

5. Service to Employees. 

Health is often part of the function of “service to em¬ 
ployees” and “rating and records” often comes under “employ¬ 
ment.” 

EMPLOYMENT 

Securing Applicants.—It is rarely safe to depend entirely 
upon the occasional applicant for new employees. It is ordi- 


SOURCES AND SELECTION OF PERSONNEL 


489 



Fig. 95.—Employment division layout. 





























































490 


THE MERCHANTS' MANUAL 


narily necessary to use the classified want columns of the 
daily paper, not extensively, but often enough to ensure a 
sufficient number of applicants. 

A method of securing employees frequently used with good 
results is through the employees of the house. If an employee 
can be persuaded to bring in his or her friend for a position, 
it has been found that the grade and quality is better than 
that secured through the classified want column. R. H. Macy 
and Company and Gimbel Brothers give a reward of $10 to 


Director of Personnel 









Employment 

Training 

Renting 

Employees 

Service 

Health 

Service 

House 

Organ 















Applications 

Placements 

References 

Salaries 

Promotions 

Txauslexs 

Discharges 

Timekeeping 

Discipline 


New 

Employees 
Store Systems 
Errors 

Salesmanship 

Textiles 

Discipline 

Lihrajy 

Sponsors’ 
Supervision 
of Gomtioua- 
tion school 


Instruction to 
Department 
Heads and all 
Employees’ as 
to method and 
application 
Follow up 
Statistics 


Personal 

Service 

Social 

Service Clubs 
Rest Room 
Recreation Em 
Restaurant 
Phys. Training 


Medical Clinic 
Physical 
Examination 
Absentee 
Follow up 


Report ing 


Editing 
Make up 
Distribution 


. 


Fig. 96.—Organization of personnel department. 


an employee through whose instrumentality a new employee 
comes into the store, provided the newcomer remains six 
months. 

To secure a satisfactory quality of employees is quite as 
difficult a problem as to secure a sufficient quantity. It is 
unfortunate that so little effort has been made to remove the 
prejudice against store work felt by many parents and teachers. 
Few people, not connected with stores, have any idea how 
greatly conditions have changed in the past decade. They 
do not know of the training given, the personal interest with 










































SOURCES AND SELECTION OF PERSONNEL 


491 


which the progress of workers is watched, the opportunities 
for advancement, the means taken to safeguard health, etc. 

In order to enlighten the public and bring in the highest 
type of applicants, one store of national reputation inserted 
the following advertisement in the newspapers: 

HAVE YOU A DAUGHTER? 

Perhaps you feel that business life may take her into surroundings 
none too healthful, physically and mentally. You hesitate to have her 
make the venture. 

We wish to help you decide your daughter’s future. Come and talk 
to an executive of the store. What you learn of our policy will give 
you new insight into business possibilities which are open to her. 

In our effort to develop character and good will in our business, we 
realize the importance of such development in people and try to sur¬ 
round members of our organization with personal comforts, and with 
that individual attention of trained executives that enables us to help 
their development, and to pay salaries commensurate with their 
abilities. 

Such a departure from the usual methods of soliciting de¬ 
partment store employees could not fail to receive favorable 
notice. It was followed by others, for example: 

TRAINING FOR HOME MANAGEMENT 

Many of the young women who enter employment quite naturally 
look upon their work as an opportunity for an active and profitable 
interval between school and marriage—a most commendable and 
natural attitude. 

As a training for managing a home successfully or for a business 
future, the advantages of store experience are valuable. Women do 
the greater part of the family purchasing, and the first essential of a 
good home manager is the ability to buy wisely. Where can she gain 
so broad and accurate a knowledge of qualities and values as in a 
good store? 

We welcome to - the young women to whose lives we can 

contribute something of permanent value besides their weekly pay. 

Talk it over with the executive on the tenth floor. 

Junior help of the right type is often difficult to secure. 
Cooperation with the public schools is a good means for secur¬ 
ing this class of employee. If the public school realizes that 
a store is not attempting to take the children away from 
school, but is willing to educate the children out of school 



492 


THE MERCHANTS’ MANUAL 


hours, cooperating with the public school teachers, a good 
combination can be made. 

Some stores arrange to have their educational director or 
some other representative tell the students of the various high 
schools of the opportunities in store work. The teachers may 
be reached at the same time and their interest enlisted. 

High schools and colleges offer an excellent source of em¬ 
ployee material of the better grade. Using students and 
teachers as part-time workers or for Saturdays would be a 
means of selling the store to pupils who think department 
store work beneath them. 

Labor Turnover.—It should be the aim of every employ¬ 
ment department to secure employees who are fitted to become 
permanent members of the organization. 

The labor turnover for any period consists of the number 
of separations from service during that period. Consequently, 
the percentage of labor turnover for any period is the ratio 
of the total number of separations during the period to the 
average number of employees on the force during that period. 
Thus, in computing a store’s annual labor turnover, the aver¬ 
age number of employees for the twelve months is determined. 
Suppose this to be 1,600. Then the number of separations, or 
individuals leaving voluntarily or by discharge, is determined. 
If this number were 2,000, then the percentage of labor turn¬ 
over for the year would be the ratio of 2,000 to 1,600 or 125 
per cent. 

That the percentage of employees changing positions each 
year is high is generally admitted. 

The cost of breaking in a new salesperson has been esti¬ 
mated variously at from $20 to $200. Some of the items 
entering into this cost are: 

Advertising for help. 

Time spent by employment manager in interviewing many candi¬ 
dates before acceptable person is found. 

Expense of obtaining references. 

Time spent in teaching new employee. 

Sales lost while salesperson is becoming adjusted to new environ¬ 
ment. 

Mistakes due to inexperience. 


SOURCES AND SELECTION OF PERSONNEL 


493 


As a first step in studying how to remedy such a situation, 
a careful analysis should be made of the reasons for with¬ 
drawals from the store. If the paymaster is instructed to pay 
off only on order from the employment department, nearly all 
employees will be seen and may be interviewed before they 
leave. A year’s analysis is usually necessary as a basis for 
conclusions. The withdrawals should be classified according 
to reasons, sex, departments and length of service. 

One store, after thorough study, has made a permanent list 
of the reasons for withdrawals as follows: 

Resigned 

1. Not satisfied with salary. 

2. Not satisfied with work. 

3. Leaving city. 

4. Better opportunities. 

5. Home reasons. 

6. Go to school. 

7. Ill health—permanent. 

S. Unable to get along with superior. 

9. Enlisted. 

10. Satisfactory reasons. 

11. Not known. 

12. Ill health—temporary. 

Discharged 

13. Incompetent. 

14. Intemperance. 

15. Insubordination. 

16. Lazy. 

17. Blunder record. 

18. Misconduct 

19. Dishonest. 

20. References. 

21. Other reasons. 

22. Suspicious circumstances. 

Laid Off 
23 Reducing help. 

24. Temporarily employed. 

25. Physical reasons. 

28. Vacation. 

Unavoidable 

29. Married. 

30. Superannuated. 

31. Deceased. 

32. Voluntary vacation. 


494 


THE MERCHANTS ’ MANUAL 


Much will be learned from such a study of labor turnover. 
Weak points in the policy and system of the employment 
office will be brought out and departmental difficulties 
throughout the store will become known and will be adjusted. 

Certain principles, applicable to all stores, may be laid 
down as of fundamental importance in reducing labor turn¬ 
over. 

1. Employment plans, carefully thought out in advance, to reduce 

unnecessary hiring. 

2. Careful selection of the new employee. 

3. Education, training, introduction to associates, and supervision. 

4. Adequate wage. 

5. Transfer before discharge. 

6. Agreeable and wholesome working conditions. 

7. Opportunities to advance. 

8. The right of every employee to a hearing and a square deal. 

Coordinating Labor Supply with Demand. —Necessarily 
in an organization so complicated as the modern department 
store, the employment manager must have some means of 
knowing what type of employee is required and in what num¬ 
bers. With this end in view, department heads are ordinarily 
furnished with requisitions such as are illustrated in Fig. 97. 

Positions usually need to be filled because of an increased 
force, positions for temporary work and replacements. The 
employment manager generally knows what kind of employees 
work best in certain departments, and on the requisition the 
buyer fills in the essential experience and qualifications. One 
week is usually requested in order to find the proper type of 
person to fit the requirements. 

Buyers’ preferences are frequently based on sound experi¬ 
ence. For example, the head of the housefurnishing depart¬ 
ment may desire married women who have kept house and 
know the use of the various articles. Salespeople who are fond 
of children are required in children’s departments. 

Selection of Applicants. —The process of selection of the 
employee usually consists of filling out an application blank, 
a physical and perhaps a mental test, and an interview. Gen¬ 
erally references given by applicants are looked up prior to 
making a final decision. 



SOURCES AND SELECTION OF PERSONNEL 495 


Form 39-Supt. Dept.-3-20. 

Requisition for New Employee. 

Date. 

Employment Bureau: 

Please supply new employee as follows: 


Department. . . 


.Position.. 


Woman. 

...Girl. 

.Man. 

. . Boy. 

Date needed. . . 





(If possible, allow at least 1 week to fill position.) 


Why needed?. 

Permanent?..Temporary? 

If temporary, how long needed?. 

Work—is it Sitting?.Standing?.Lifting? 

Necessary qualifications?.. 

What experience is essential?. 

Whom in the store can you recommend for this position?. 


Remarks... 

Send this to Employment Bureau in sealed envelope. 

Signed.. 

EMPLOYMENT BUREAU MEMO 


Approved for filling.Supt. 

Date 


Fig. 97.—Requisition used in employment department. 




































496 


THE MERCHANTS’ MANUAL 


The Application Blank.—The judicious use of the appli¬ 
cation blank permits a preliminary weeding out of candidates 
for positions. No time is wasted in interviewing unless the 
applicant shows promise of being suitable. Should the ap- 



APPLICATION NO. 

FOLLOW-UP OATES 


IW) 

1 




























Were you ever employed by Marshall Field & Co., Wholesale 

or Retail, if so, 








Give name* and addresses in consecutive order of all former employers, starting with last one. 


1 

NAME OF LAST EMPLOYER 

Position you held 


From what date? 



Street City 

Under whom’ 


To what date’ 



NAME 

Position you held 


From what date? 



Street City 

Under whom’ 


To what date? 



NAME 

Position you held 


From what date? 



Street City 

Under whom-* 


To what date? 



NAME.' 

Position you held 


From what date’ 



Street City 

Under whom ’ 


To what date? 



NAME 

Position you held 


from what date? 



Street City 

Under whom.’ 


To what date? 



Have you had any employer other than those above given?. 



and 


address.-....... 





Were vou ever dismissed for cause?.-.Bv whom? . 





State reason .-. 












Give names and addresses of persons who can vouch for your 
f Not relatives or former employers) 

character and habits 


3 

NAME 

Occupation 

Known you how long’ 



Street City 


State 




NAME 

Occupation 

Known you how long* 



Street Cay 


State 




NAME 

Occupation 

Known you how long* 



Street City 


State 




SEE OTHER 

Sp. File.D. File........Entered by. 

SIDE 

.Card.-_ 

..O. K. for file. . 



IKi.ntn—SPC*7—luM-7-20—42 WJ 







Fig. 98.—Application blank. 


plicant for employment be accepted, the application blank 
serves as a permanent record. 

Figures 98 and 99 are typical examples of application 
blanks which must be filled out by persons seeking employ- 




















































SOURCES AND SELECTION OF PERSONNEL 497 

ment with Marshall Field and Company, or with the Em¬ 
porium at San Francisco. 

The Interview.—All applicants for positions deserve every 
courtesy. It is well to look at the treatment of the applicant 



"f 

APPLICATION No. I 


(W) WOMEN NOTICE TO APPLICANT. 

Any position given you upon this application may prove temporary. Should we wish to dispense with your 
services at any time after date of your engagement, or should we wish to adapt vacations to suit business condi¬ 
tions, we shall be at perfect liberty to do so. This notice is given inasmuch as we usually do not dismiss except 
for cause. Should we employ you, we shall consider it our right and duty to notify any or all to whom you have 
referred us of any act which in our opinion would justify your dismissal. 

MARSHALL FIELD & COMPANY 

Date...... Telephone No....... 

Name in full......... 

Address ........... 

Street Suburb 

For what position do you apply ?........,.. 

What is ycur age?......Date of birth? .... 

Month Ot; Year 

What grade or class were you in when you left school ?...-.. 

Nationality or descent?...............-.Where were you bom?.— 

Are you single, married, widow or divorced?....No. of dependents?.-.—- 

Are you living with parents, relatives, boarding or housekeeping? ...- 

If single, what is your father’s business?......-... 

If married, what is your husband's business?.-. 

Have you contributed to the support of any relative within the last four years?.- 


If so, whom and to what extent?.—... 

Have you any relatives employed by us?..If so, names and where employed?... 

Have you any defects in sight, hearing, speech or limb?... 

In order to satisfy yourself and us that you are in good health, are you willing to submit to a physical examina¬ 
tion ? ..—.............-..-- 

Should we employ you, will you agree to keep the amount of your salary confidential?..———— 

SEE OTHER SIDE 

Do ooi write in spaces below 


FOR_ 

Engaged by. 


COMMENCED....SALARY 


Full Time 

S.H. 

Hour* 

Part Time 

M. 

T. 

W. 

T. 

P. 

t. 


4 


Fig. 98.—Application blank. 

from the point of view of the value to the organization. The 
applicant for a position receives the first impression of the 
house from the employment office. There should be a suffi¬ 
cient number of chairs and tables provided with pens and ink. 

32 




















































498 


THE MERCHANTS’ MANUAL 


Some employment managers conduct an interview with the 
applicant standing. Others find it better to have the appli¬ 
cant seated, in order to make it easier for the applicant to 
answer questions. 



BUSINESS EXPERIENCE 




Please account for all your time since 
BEGINNING WITH LAST POSITION. 

leaving school. 

please list below all places where yon have worked. 




Do not write 
in thia apace 

Name of LAST employer? 


Town and Street Address? 




Business? 


In what Dept, or under whom? Nature of work? 


Salary 



How long employed there? 


Date of Leaving? 

Why? 


i 


Employer before the above? 


Town and Street Address? 





Business? 


In what Dept, or under whom? Nature of work? 


Salary 



How long employed there? 


Date of Leaving? 

Why? 




Employer before the above? 


Town and Street Address? 





Business? 


In what Dept, or under whom? Nature of work? 


Salary 



How long employed there? 


Date of Leaving? 

Why? 




Employer before the above? 


Town and Street. Address? 





Business? 


In what Dept, or under whom? Nature of work? 


Salary 



How long employed there? 


Date of Leaving? 

Why? 




Employer before the above? 


Town and Street Address? 





Business? 


In what Dept, or under whom? Nature of work? 


Salary 



How long employed there? 


Date of Leaving? 

Why? 




Employer before the above? 


Town and Street Address? 





Business? 


In what Dept, or under whom?' Nature of work? ' 


.Salary 



How long employed there? 


Date of Leaving? 

Why? 




Employer before the above? 


Town and Street Address? 





Business? 


In what Dept, or under whom? Nature of work? 


Salary 

i 


How long employed there? 


Date of Leaving? 

Why? 


• 


Employer before the above? 


Town and Street Address? 





Business? 


In what Dept, or under whom? - Nature of work? 


Salary 



How long employed there? 


Dtte of Leaving? 

Why? 


1 


Employer before the above? 


Town and Street Address? 



I 

i 

i 


Business? 


In What Dept, or under whom? Nature of work? 


Salary 

V 

1 

1 


How long employed there? 


Date of Leaving? 

Why? 


1 

• 

1 


( : 

»-....—..j 

Fig. 99.—Application blank. 

Since an application blank can never tell the whole story, 
the interview serves to fill in and amplify. Anything that the 
applicant may tell about her home life will be of value to the 












































SOURCES AND SELECTION OF PERSONNEL 


499 


interviewer, since home conditions play a large part in the 
effectiveness of the work done by an employee. 

The applicant should be required to give all positions filled. 
If there are intervening spaces not filled in on the application 


Date 


192 


Engaged for Dept. 

Date 

192 

Dept. 

Salary 

S»g. 

Position 

Salary 

Date 

192 

Dept. 

Salary 

Sig. 


Signed 

Date 

192 

Dept. 

Salary 

Sig. 


Instruction 

Date 

192 

Dept. 

Salary 

Sig. 

No. 




Do not write above this line 

INFORMATION RECORD 

Each question must be answered accurately and fully in ink. 


11 Single, married, widowed, divorced or 
separated? 


14 What education have you had?. 


17 Have you ever been in our employ? 

If so, when and in what department? 


20 


Write Plainly 


Date 

192 

1 Name in Full 

2 Age 

Years Months 

3 Date of birth? 

Day Month Year 

4 Where were you 
born? 

5 Address 

6 Telephone 
Number 

7 Do you live with parents, relatives, keep 
bouse or board? 

8 For what position do you apply? 

9 Salary 
expected? 

10 With what lines of 
familiar? 

merchandise are you 


Do not write In thia 
space. 


Ht 


Bd. 


Col. 

Dr. Ap. 


Sp. 


Person 


Suited for 


12 Give number and relationship of persons you 
support entirely? 


15 Name and address of school last attended? 


18 Have you any Relatives in our employ? 
If so, whom? 


21 


13 What foreign languages do you 
apeak? 


16 Date of Leaving? 


19 Whom of our employees do you 
know? 


22 


Give names and addresses of four persons, not relatives or former employers, who have known you for over a year. 


Name 

1 

Full address. 

Profession or Business 

Tim* thia person 
has known me. 

2 




3 




4 





READ CAREFULLY 


Any employment given you upon this record may prove temporary; such employment will be by the day; at the monthly 
rate agreed upon, and may be terminated by either party at any time without formal notice. 

All applicants will be required to pass our medical examination before being permanently enrolled. 


WOMEN—My signature affixed below is acknowledgement that I am informed regarding the State Law permitting women 
to work 8 hours only per day, and I agree to abide thereby. 


I CERTIFY THAT ALL MY REPLIES TO ALL QUESTIONS ON THIS RECORD ARE ABSOLUTELY TRUE 


Signature 


(OVER) 


Fig. 99.—Application blank. 


blank, it is well xo look into this carefully, for the interviewer 
frequently finds that the applicant may not care to talk about 
that period of employment. 


























































500 


THE MERCHANTS ’ MANUAL 


References.— There is a tendency to reduce the number of 
references looked up because such a large percentage of refer¬ 
ence blanks are answered perfunctorily, and because often 




Report 

Date.. 

How long have you known applicant?. 
If applicant is related to you, how?. . . 
Was applicant ever in your employ?. . 

Employed in what capacity?. 

From.19-, to.... 

Why did applicant leave?. 


.192. 




.19.... 


Ability?, 


Would you re-engage applicant?. 

What is your opinion of applicant’s character?. 


Do you know of anything against applicant’s honesty?. 


Do you know of any reason why we should not engage applicant?.. 
Can you recommend applicant for position applied for?. 


Remarks. 


Signed. 


Fig. 100.—Questionnaire form for obtaining information about employee. 


employees dismissed for dishonesty have had satisfactory 
references. The value of references has in the past been over¬ 
estimated. The applicant, however, should get the impression 
that references are important. 

Anything, however, which will help the store secure infor- 




























SOURCES AND SELECTION OF PERSONNEL 


501 


mation about the employee is of value, particularly when it 
checks up statements made by the applicant. In some cases 
the telephone may be used; in others it is preferable to use a 
letter in questionnaire form, such as Fig. 100. The furnishing 
of such information is a matter of business courtesy. 

In some cities there are employees’ reference bureaus which 
facilitate the looking up of references. In Detroit, for example, 
the Retail Merchants’ Bureau is equipped to handle the 10,000 
employees of the larger Detroit stores. It keeps records of 
applications, references, and discharges, together with master 
filing cards, for compilation of all data concerning individual 
employees. 

Physical Examination.—There is much to be said from 
the points of view both of the store and of the employee for 
and against physical examinations. The practice is not gen¬ 
eral by any means. 

From the point of view of the store, the health of the worker 
is regarded as determining his or her efficiency to a great 
extent. This is particularly true as regards absenteeism. 
There are, it is true, certain departments where robust health 
is not necessary, but, generally speaking, the work in a selling 
department requires physical stamina in the salesperson. 

If it is possible to obtain employees in good physical health 
by the use of medical examination prior to employment, it 
seems logical to the store that this should form part of the 
entrance requirements. Figure 101 shows the record card kept 
of such a test by one store. 

Pre-employment Tests.—Pre-employment tests are de¬ 
veloped along the following lines: 

1. General intelligence tests. 

2. So-called trade tests. 

The proper test will include those questions the answers to 
which will have a real bearing on the fitness of the employee 
to fill the position. In many cases experience is not demanded, 
and the trade test is not required. In manufacturing depart¬ 
ments, or where experienced applicants are engaged, the trade 
test, or the determination of the technical knowledge of his 
job by the applicant, will be valuable. 

The value of pre-employment tests is not yet universally 


502 


THE MERCHANTS' MANUAL 


Name 

Age 

S. M. D. W. Date 

“1 

FAMILY HISTORY 

Appendix 

F. L. D. 

Cause 

Bro. L. D. 

Asthma 

M. L. D. 

Cause 

SS. L. D. 

Bronchitis 

T. B. 

Co-hab. 

Neuras 

Bladder 

Cancer 


Epilepsy 

Diptheria 

PERSONAL HISTORY 

Gonorr. 

Injuries 


Deform. 

Glasses 

Operations 

Heart 

T. B. Cough 

Lor. G. Wt. 


Headache 

N. Sweats 


Appetite 

Kidney 

Menses Began 

Cease 

Child 

Liver 

Reg. 


Uterus 

Malaria 

Flow 


Breasts 

Mumps 

Pain 


Discharge 

Measles 

PHYSICAL EXAMINATION 

Neuralgia 

Gen. Dev. 

Skin acne. 

Teeth 

Neurosthenia 

Nour. 

Edema 

Lymph N. 

Otitis. M. 

Height 

Jaundice 

Thyroid 

Pneumonia 

Weight 

Pigment 


Pleurisy 

Cyanosis 

Rheumatism 

Chest Shape 

Deform 

Mamm. 

Skin Rash 

Lungs 

Syphilis 


Scarlet Fever 

Heart 


B. P. 

Small Pox 

Abd. 

Typhoid Fever 

Liver 

Back Kyph. 


Tonsilitis 

Spleen 


Lord. 

T. B. 

R. L. Kid. 


Scol. 

Varicella 

Genit Penis 

Fem. Ext. 


Vaccinated 

Test. 

Int. 


Varicose veins 

Varic. 

Hernia 


Wh’p’ng Cough 

Hernia 


Refflxes. Eye 

Extr. 



Patella 

Clubbing 



Arch 

Deform. 



Urine Color 

Sp. Or. 

Sugar 


React. 

Alb. 

Sediment 


Nose 


Ear 




Tonsil 


Eye 


Physician 





Fig. 101.—Record card of physical examination. 






































































SOURCES AND SELECTION OF PERSONNEL 


503 


agreed to. Certain office positions, such as stenography, filing, 
and operating bookkeeping machines, may have a simple test 
worked out to determine the applicant’s accuracy and general 
efficiency. In one large Eastern store the applicant for a 
position in the coat, suit and dress departments is questioned 
as to her familiarity with merchandise and the degree of style 
sense which she possesses. Three models are shown and two 
suits, coats and dresses for each, one correct and one incorrect. 
The applicant must choose the garment she prefers for each 
model, giving reasons, and passing upon suitability of acces¬ 
sories. Such tests will indicate quickly the need for special 
training of the applicant if she is desirable in other ways. 

Placement.—Successful placement considers experience and 
inclination. It is recognized that if a person is not suited to 
the task performed, maximum efficiency will not be obtained. 
Hence initial placement should be only temporary and subject 
to review at the end of a certain period. During the first few 
weeks the employee understands that he or she is on pro¬ 
bation, and that at the end of the probationary period there 
will be another interview to determine whether the position 
is to be permanent. 

The subject of training is discussed at length in the next 
chapter. If an educational department does not exist, the 
new employee should be carefully introduced in the section 
where he is to work. A sponsor system operates successfully 
in many large stores. A friendly, intelligent person is ap¬ 
pointed in each office and department to help the new employee 
get his bearings, and to instruct and guide as may be neces¬ 
sary. Extra compensation in the form of money, time off, or 
additional vacation is sometimes given in return for this 
special service. 

Job Analysis.—Job analysis provides a definite set of 
specifications by which every position in a store may be filled 
intelligently by the employment manager. It is the ultimate 
step in correlating labor supply with demand. It avoids dupli¬ 
cating positions, prevents misfits to a great extent, and reduces 
labor turnover. The service to be rendered to the public must 
also be kept constantly in mind. In fact, a knowledge of the 


504 THE MERCHANTS’ MANUAL 

job is absolutely necessary before hiring and before setting an 
equitable wage. 

All sections of the store should be carefully divided and 
analyzed. Detailed studies, in many cases, are made of all 
the positions in the store. It has been found that studies of 
this kind make for better organization in that they establish 
the scope of a position and define its limits. 

Various methods are followed in making job analyses. In 
the case of Wm. Filene’s Sons Company, job analysis is tied 
up with specialized training. It is felt that before any adequate 
training can be carried out the job to be trained for must 
be analyzed. If instruction is to be given in the work of the 
head of stock, the duties for this position should be the same 
throughout the store. 

The special teacher acquaints herself with the job under 
analysis by doing it in representative places throughout the 
store. She then prepares a questionnaire and with this as a 
basis she discusses the job with the group of operators who 
are organized with their own officers. In this way the job is 
analyzed and its content agreed to by the group. The group 
then goes to the organization of their immediate executives to 
obtain its sanction for the job as outlined, and thereafter 
works out the standard practice. 


CHAPTER XXXIII 


EDUCATION AND TRAINING 

The first school for the training of educational directors was 
started in 1905 by Mrs. Lucinda W. Prince in Boston, known 
as the Prince School of Education for Store Service. Practical 
experience is ensured by an arrangement with the department 
stores of Boston by which pupils of the school spend about 
half their time in practical work in the stores. 

According to the definition of the school, a “store educa¬ 
tional director aims to establish harmonious relations between 
employers and employees, based on understanding of their 
common problems, to strengthen the position of the store in 
the community through the upbuilding of constructive policy, 
and to develop the powers and resources of the personnel in a 
way which will result in the most effective conduct of the 
business.” 

With this idea in mind courses are given in psychology, 
economics and education, with special reference to mercantile 
problems. A course in textiles is given, also short courses in 
employment, industrial hygiene, statistics, wages, merchandis¬ 
ing, office management and organization. 

In 1918, the Carnegie Institute of Technology, Pittsburgh, 
established a Research Bureau for Retail Training, and, in 
1919, New York University established a School of Retailing. 

In the larger stores the duties of the educational director are 
largely executive, and her time is spent in planning and super¬ 
vising. Under her are special teachers who do the actual work 
of instruction. 

In the medium-sized stores the educational director does the 
actual teaching, and in addition controls the welfare work of 
the employees, and perhaps has charge of rating systems, etc. 

In the smaller stores, the educational director may do the 
employing as well as training, supervising social activities, 
visiting sick employees, continuation training, etc. In the 

505 


506 


THE MERCHANTS’ MANUAL 


small store her work will be chiefly with workers already em¬ 
ployed by the store, since newcomers would be comparatively 
few. 

Groups to be Trained.—One of the first duties of the 
educational director is to divide the personnel of the store into 
groups according to the type of instruction to be given: 

1. New employees. 

2. Juniors. 

3. Salespeople. 

4. Heads of stock. 

5. Assistant buyers. 

6. Executives. 

7. Non-selling employees. 

a. Office. 

b. Delivery. 

c. Elevator. 

d. Stock clerks. 

e. Telephone operators. 

f. Etc. 

Certain subjects in the curriculum of training will be com¬ 
mon to all groups, while others will be applicable to special 
groups. Ordinarily the educational director will be called 
upon to give instruction in: 

1. System. 

2. Salesmanship. 

3. Merchandise. 

4. Store policy. 

5. Business arithmetic. 

6. Business English. 

, 7. Special duties. 

Methods of Training Store Groups.—The method by 
which instruction is given depends on many factors, among 
which are: 

1. The policy of the store, which determines the attitude 
taken towards training in general. The store in which the 
management is enthusiastic naturally carries training further 
than where the management is not wholly convinced of its 
value. 

2. The size of the store, which has a determining effect on 
the methods by which the work is carried on. 

3. The type of personnel. 






EDUCATION AND TRAINING 


507 


4. The methods of the educational director herself. 

5. The educational opportunities offered by the community. 

Most stores and most educational directors agree that in¬ 
structions to new people in the policy and system of the organ¬ 
ization should be given in the class room. 

The teaching of the other subjects to employees already in 
the organization may be carried on in two ways: 

1. Class-room instruction. 

2. Instruction on the floor. 

Class-room instruction, in addition to lectures, may use 
moving pictures and merchandise manuals as aids. 

Instruction on the floor may be given individually, through 
department conference, or by means of demonstration sales. 

The active assistance of store executives is valuable in both 
methods of teaching. This ensures the combination of accu¬ 
rate knowledge and experience with training in educational 
methods. 

There are communities in which the resources for education 
on retail subjects have been developed, and in such cases may 
be used by the store profitably. Many organizations use both 
outside and inside facilities for education. For example, the 
class in merchandise may attend lectures given at an art 
museum on color and design. 

The Training of New Employees.—The contrast between 
the old and the new order in department store personnel ad¬ 
ministration is well illustrated by the new employee’s first day 
in the store. 

The progressive personnel department acknowledges the 
importance of the initiation period. It is vital that the begin¬ 
ning of the employee’s career in the store be right. 

The following is an outline description of the first day of a 
new employee in an eastern organization: 

I. Employment office. 

A. Newcomer reports to the employment division at 8:45 a. m. 

The desk clerk says, “good morning,” and asks her to be 
seated. 

B. New help slip and time card given to newcomer. 

C. Rule book given to new employee with the following request 

and explanation: “Please sign your name on this page to 
show that you have received a rule book. It contains the 


508 


THE MERCHANTS’ MANUAL 


most important rules and policies of the store. Read it while 
you are waiting.” 

D. Locker key is assigned. 

II. Locker room. 

The newcomer is shown her locker by the messenger and removes 


her wraps. 

III. Time desk. 

Messenger takes her to the time clock where the man in charge 
of the time desk teaches her the proper way of inserting card, 
explaining that salary is dependent upon the accuracy of these 
cards. This is done so that she will be careful in ringing in 
and out. 

IV. Physical examination. 

V. Educational department. 

A. Instruction in rules and policies. 

B. System instruction—Part I. 

C. Luncheon. 

The messenger of the educational division offers to take those 
who wish to go to the store lunch room. In many organiza¬ 
tions, the new people are taken to lunch by a sponsor from 
their department. The lunch is paid for by the organization. 
This is an excellent way of gaining good will. 

D. System instruction—Part II. 

VI. Introduction to fellow employees. 

Introduction of the employee after the finishing of the system may 
be done in two ways. 

A. Messenger introduces employee to the division superintendent, 

who, in his turn, has the responsibility of introducing her to 
the aisle managers and various members of her department. 

B. The sponsor in each department (sponsor means a person who 

has been selected in each department to take charge of new 
people and familiarize them with their work) is called to the 
Educational Division. The new person is introduced to her 
and then the responsibility of making her known in her sec¬ 
tion of the store belongs to the sponsor. 


In another store the period of training prior to selling lasts 
two days. The program of work is as follows: 

FIRST DAY 

Employment office and time desk. 

System I and measuregraph. 

Store directory and tour to lockers, etc. 

Lunch. 

Cash register I. 

Study of instruction booklets. 

System II. 

Store policies and organization—promotion possibilities. 


9:00-10:00 
10 : 00 - 11:00 
11 : 00 - 12:00 
12 : 00 - 1:00 
1 : 00 - 2:00 
2:00- 3:00 
3:00- 4:00 
4:00 


EDUCATION AND TRAINING 


509 


SECOND DAY 


9:00-11:00 
11 : 00 - 12:00 
12 : 00 - 1:00 
1 : 00 - 2:00 
2:00- 3:00 
3:00- 5:00 
5:00 

5:15 


Instruction department under fellow-worker secretary. 
System III and Cash Register II. 

Lunch. 

Study period. 

General examination. 

Instruction in department under fellow-worker secretary. 
Return to school of salesmanship for certificate of in¬ 
struction. 

Return to department and present certificate. 


Although not definitely stated in the outline, a personal 
interview with the teacher in charge is an important feature 
of this two days’ plan. In the course of a friendly talk with 
the new worker, the teacher learns much concerning her tastes, 
abilities, needs and ambitions. 

Training in System.—Teaching new salespeople how to 
make out the various forms of the salescheck is a universally 
accepted function of an educational director. In order to do 
this successfully, the teacher must first learn the details of 
the system. It is often found that there is a surprising lack 
of uniformity in the handling and interpretation of the store’s 
system. Some salespeople may never have heard of a rule 
which others are carefully observing. If a system manual is 
not in use, it is good policy to prepare one, illustrating forms, 
and giving explanations of procedure. 

In teaching salescheck forms, the teacher should not lecture 
or demonstrate more than is necessary. Best results are ob¬ 
tained by making the pupils do the work. For example, all 
details of sales are dictated to the pupils who write out the 
sales on saleschecks as though the actual sale were being made 
in the department. Great care should be taken in selecting 
problems so that all possible contingencies are covered. 

The more difficult combinations in addition and multiplica¬ 
tion are preferable to the simpler forms. For example, this 
problem: 


3 shirts 

@ 

$2.49 

$ 7.47 

2 ties 

@ 

1.39 

2.78 

3 collars 

@ 

.35 

1.05 


$11.30 



510 


THE MERCHANTS ’ MANUAL 


is a better test of mentality than this one: 


3 shirts @ S3.00 $ 

2 ties @ 1.00 

3 collars @ .25 


$ 9.00 
2.00 
.75 


SI 1.75 


In particular, salespeople who are to sell in yardage depart¬ 
ments should always be well tested in fractions. 

Addresses used in dictated sales should be planned to bring 
out the many small points which experience has proved need 
emphasis. Some of these points are: 

1. Care in getting the correct spelling of all unfamiliar names and of 
those which are spelled in more than one way as “Rogers” and 
“Rodgers.” 

2. Correct forms of abbreviations permitted as “Ave.” or “Blvd.” 

3. Use of addresses of apartment houses and hotels in order that the 
importance of recording suite number and room number may be 
taught. 

4. Use of more difficult names of customers, streets, and towns, 
instead of any simple combination which happens to come to mind. 

While the system lesson is going on, the instructor notes 
especially such points as the following: 

Clearness of writing and figures. 

Spelling. 

Accuracy. 

Neatness and general standard of work 

Quickness to grasp and apply. 

Aptitude for department to which assigned by employment office. 

Other matters of a more personal nature which cannot fait 
to be observed are the appearance of person and clothing, a 
tendency to nervousness and shyness (which is a serious 
drawback in selling) and any marked physical defects such 
as deafness, defective vision and poor muscular control. If 
the store has not adopted the policy of a simple physical 
examination for its new employees, a report on such points 
as these is obviously of value to the employment manager. 
It is customary to give this official each day a brief report 
on each person instructed during the day. 

After a new salesperson has been at work a day or two, a 
member of the educational department visits her in her depart- 




EDUCATION AND TRAINING 


511 


ment, asks a few review questions, cleans up any difficulties 
and gives any advice which the case calls for. A report is 
obtained from the floor superintendent on the work of the 
newcomer and, if it is not satisfactory, a special lesson may 
be given. 

The amount of time given to training new salespeople in 
system varies greatly. In some stores, the use of the cash 
register and measuregraph is included in the system work, 
and is taught the first or second day, while in others, these 
and special matters are taken up later. It is probably safe 
to say that the training in system occupies from one-half to 
five days, according to the amount of ground covered, the 
number of lessons given, and the thoroughness of the teaching. 

The Training of Juniors.—The division of workers com¬ 
monly known as juniors usually includes messengers, packers 
or wrappers, examiners or inspectors, and stock boys or girls. 
To be exact, the classification generally includes all young 
people in the organization between the years fourteen and 
twenty-one. 

Formerly, most stores attached little importance to the 
training and development of the younger employees. If a 
boy or girl left, it was easy to replace him or her, since such 
help was plentiful and cheap. It is now recognized that the 
younger workers are the store’s most valuable material for 
the building of a firm and well-knit organization. Every effort 
is being made by the thoughtful employer to select the right 
kind of young person and give him the best possible training, 
and then see that he is advanced according to his merit. 

Selection of juniors should be made on the basis of employ¬ 
ing boys and girls who are believed to be well suited to the 
organization and who, presumably, will be worthy of promo¬ 
tion to higher positions. In hiring juniors, the superintendent 
in charge shows them a promotional chart and explains the 
opportunities open to promising workers. 

Constant supervision, personal contact, and encouragement 
are considered very important factors in the training of 
juniors. Girls between the ages of sixteen and eighteen be¬ 
come discouraged very easily and are often ready to leave 


512 


THE MERCHANTS' MANUAL 


their positions for the most trivial reasons. The person who 
takes a friendly interest in them and wins their confidence 
will be able to prevent much shifting. 

Regular, unremitting follow-up is a special need of this 
group, not only because of the youthfulness of the workers 
but because a great amount of exact, detailed work is required 
of them. Since the junior employees form the groundwork 
for the personnel of the future, it is clearly advantageous to 
make the positions which they hold as attractive as possible 
by proper training, supervision, an adequate wage, and a 
satisfactory promotional plan. 

TRAINING IN MERCHANDISE 

The buyer is the logical person to teach the qualities of the 
merchandise to those who sell it. Such is the idea of many 
stores. It would seem a foregone conclusion that every buyer 
would take up new merchandise with his department as soon 
as it is received, yet many buyers never do this, and others do 
it but seldom. Some simple plan should be inaugurated by 
which salespeople are sure of receiving instructions in the mer¬ 
chandise sold. 

In other stores, it has been found that it is more satisfactory 
for a trained teacher to learn merchandising to the point of 
being able to instruct salespersons, than for a buyer to at¬ 
tempt to become an instructor. 

In some stores the educational department has assumed 
responsibility for systematic instruction by buyers. The 
management must, however, stand back of such a plan and be 
ready to enforce it, if necessary. While some buyers are 
natural teachers and need little, if any, assistance in this work, 
others must be helped and encouraged by the educational de¬ 
partment until they have sufficient confidence to carry on the 
teaching unaided. 

In some stores merchandise instruction is given by the as¬ 
sistant buyers. In other stores, particularly larger ones, the 
store is divided into sections, and one teacher is made respon¬ 
sible for all the training of the workers in a given section. The 
division is sometimes made according to floors and sometimes 


EDUCATION AND TRAINING 


513 


on the basis of merchandise. Where this plan is in operation, 
the teacher gathers information regarding the merchandise 
from the buyer and from all other available sources. 

The Use of Merchandise Manuals.—Merchandise man¬ 
uals or pamphlets containing in concise form the most im¬ 
portant facts which salespeople should know concerning a 
given line of stock are considered valuable by some stores. 
The information is obtained and compiled in a variety of 
ways, sometimes by the educational department in coopera¬ 
tion with the buyer and salespeople, by the buyer himself, by 
the advertising department, and sometimes by outside experts 
engaged to do this special work. 

An important point to remember about the merchandise 
manual is that some one must be responsible for frequent 
revision, since much of the value of the manual is lost unless 
the information is fresh and modern. 

The handkerchief department manual of a large Eastern 
store reads in part, for example, as follows: 


Materials 

Linen 

Cotton 

Silk 

Linen 


Styles 

Lace 

Embroidered 

Hand 

Machine 


A light weight, plain woven cloth made 
from flax fibres. Distinguished by un¬ 
evenness of threads 


Workmanship 

Hems 

Designs 

Constructions 

Selling Points of Linen 
Handkerchiefs 

1. Very soft 

2. Absorbs moisture 

quickly 

3. Launders very well 

4. Keep their crispness 

indefinitely 

5. Keep their whiteness 


Hand Spun Linen 

The finest hand spun linen handkerchiefs 
come from France. Hand spun linen is 
softer and has much more of the silver lus¬ 
ter for which linen is so much admired. 
You will find it easy to recognize this 
which is the most beautiful of the sheer 
linens 
33 


Selling Points 

1. Quality 

2. Sale as linen 




514 


THE MERCHANTS' MANUAL 


Cotton 

Cotton is a plain woven material, value 
depending on quality; fuzzy, and apt to 
become yellow in laundering. It does 
not readily absorb moisture 
Lissu e 

Lissue handkerchiefs are made of fine 
mercerized cotton 


Crepe de Chine 

A soft, light-weight silk of plain weave, 
with a finely crinkled surface, produced 
by twisting the filling threads very 
tightly, and alternating them according 
to the direction in which they are 
twisted 
China Silk 

Real China silk is a thin silk distin¬ 
guished by the fact that some of its 
threads are heavier than others and by 
its extreme softness. The imitation 
lacks the softness and luster of the real 
article, besides being made of even 
sized threads 
Kind of Handkerchiefs 

Women’s handkerchiefs 
Men’s handkerchiefs 
Children’s handkerchiefs 
Etc., etc. 

The above sample shows what may be done in the way of an 
extremely simple merchandise manual. Many manuals are 
elaborate and complete. 

Merchandise Exhibits.—Valuable and instructive exhibits 
showing processes of manufacture may be obtained from some 
manufacturers. Such an exhibit may be placed in the depart¬ 
ment where the merchandise represented is sold, or in the class 
room. These are most helpful in making merchandise lessons 
concrete, easily remembered and interesting. When explained, 
these exhibits are of great interest to salespeople and frequently 
to customers who may overhear a merchandise lesson of this 
kind being given in a department. 


Selling Points 

1. Less expensive than 

linen 

2. Holds dye 

Selling Points 

1. Fine quality 

2. Designs on lissue are 

always fast color 

Selling Points 

1. Very durable 

2. Launders well 

3. Takes good colors 


Selling Points 

1. Wears well 

2. Launders as well as 

white cotton. 


Materials 
Linen, cotton, silk 
Same as women’s 
Linen, cotton 







EDUCATION AND TRAINING 


515 


Many manufacturers issue advertising material of distinct 
educational value. Books, circulars, and pamphlets should be 
examined for the information contained in them, and, if found 
good, should be brought to the attention of the salespeople 
who sell the advertised article. 

Reference Books and Magazines.—Somewhere in every 
store there should be place for a reference library. In the 
large stores it may be necessary to have a librarian to take 
care of the books and assist employees in finding the desired 
information. 

In all store libraries place should be found for the following: 

English dictionary. 

French dictionary. 

Atlas. 

Encyclopedia and dictionary of names. 

Book of synonyms. 

Histories. 

Books on costume. 

Reference books dealing with merchandise carried in the store. 

Public Libraries.—The public libraries in a number of 
cities have compiled lists of books contained in the library 
which are of interest and value to store workers. In some 
cases the expense of printing the lists is borne by the library 
and in others by the Chamber of Commerce or Retail Trade 
Board. The public libraries of St. Louis, Detroit, Toledo, 
Cleveland and Newark are among those which have prepared 
lists for stores. 

The Use of Moving Pictures in Training.—Motion pic¬ 
tures for instructing salespersons in their work are now avail¬ 
able for retailers. Sales are often lost because of the ignorance 
of the salesperson as well as that of the customers. There 
are comparatively few books on the process of manufacture 
of the various commodities sold over the counter, and these 
are not attractive to the average sales girl. If the sales force 
could see the story of their wares they would be able to guide 
the choice of their patrons more intelligently. 

Motion pictures can be used effectively in teaching sales¬ 
manship and selling methods. 

Entertaining and instructive as motion pictures undoubtedly 


516 


THE MERCHANTS' MANUAL 


are, they should not be considered a substitute for class room 
work, since they do not develop the mind or stimulate inde¬ 
pendent thought and study. A lesson may be followed by a 
picture but a picture shown without any preparation or ampli¬ 
fication is likely not to be understood. 

SALESMANSHIP 

It took a long time to convince retail stores that salesman¬ 
ship was not necessarily special knowledge gained only through 
years of experience, but that it could be taught salespeople, 
and thereby the selling efficiency of the store enormously 
increased. 

Salesmanship, as Nystrom says, is nothing more nor less 
than presenting ideas to the customer’s mind in the order and 
manner that are most likely to gain for them a favorable 
consideration. The successful salesperson, therefore, is a 
student of human nature. 

Making a sale is generally divided into three parts: 

1. Approaching the customer. 

2. Demonstrating the goods. 

3. Closing the sale. 

The importance of creating a favorable impression on the 
customer should never be overlooked. However, the method 
of approach is many times subject to discussion. It is at this 
point that the salesperson makes her initial analysis of the 
customer, suiting her methods to the type of person. In 
some departments, however, such as the book department, 
customers many times prefer to be left alone until they have 
made a choice and the approach of a salesperson may prevent 
rather than make a sale. Ordinarily, however, the customer 
requires immediate attention and the manner in which this 
attention is given will do much towards making the cus¬ 
tomer’s mind favorably inclined towards the actual purchase. 

Presenting the merchandise for the customer’s consideration 
requires an expert knowledge of merchandise, and the selec¬ 
tion of those points which are most likely to appeal to the 
particular type of customer. The force of the presentation 
and the confidence of the salesperson will do much towards 
effecting a large percentage of sales. 


EDUCATION AND TRAINING 


517 


Closing the sale is the most critical part of many sales, 
since the ultimate decision may be dependent upon the tact 
and judgment of the salesperson. Salespeople are frequently 
in a position to know a great deal more about what is becom¬ 
ing, or what is suitable, than the customer, and should, when¬ 
ever possible, exercise this knowledge. 

The teaching of salesmanship, as many store executives 
know, is not simple. With the best will in the world many 
salespeople seem unable to grasp the essential principle of 
salesmanship that it is the customer who must be sold, and 
not certain goods which must be sold the customer. 

A definitely outlined course in salesmanship, based on a 
dozen or more leading topics, may be given in a series of con¬ 
ferences or lessons to a group in a class room. These frequent 
discussions are helpful in rousing interest and holding it over 
a considerable period. Many problems are brought up by the 
pupils themselves. Salesmanship may also be taken up with 
department groups in a department. 

In one store every saleswoman has a six weeks’ course in 
salesmanship whether she is experienced or inexperienced. This 
is done in order that, to a certain degree, there will be a uni¬ 
form method of salesmanship, and that each possesses the 
store’s individual idea of service. 

All such classes should be held in store hours, preferably 
the first hour or two in the morning. Managers will find it 
both interesting and advantageous to visit classes, while such 
action on their part stimulates interest on the part of the 
salespeople. 

The Demonstration Method.—Salesmanship may be 
taught with special success by the demonstration sale method. 
While such a sale may be undertaken with a general group in 
a class room, best results are obtained if the demonstration 
is confined to the members of a single department or of several 
closely related departments, such as cloaks and suits. In this 
way the application to special and individual problems is 
more easily made. The salespeople may be assembled im¬ 
mediately after the opening of the store together with the 
floor superintendent of the section and the buyer of the 
department. 


518 


THE MERCHANTS’ MANUAL 


The demonstration is aimed to bring out both the types of 
customer likely to be encountered, and the selling points pos¬ 
sible for the salesperson to bring up. Helen Rich Norton, of 
the Prince School, classifies thirty-six types of customers 
which the salesperson is likely to encounter. 

One of the group is generally chosen for the salesperson and 
someone, usually an experienced person from another depart¬ 
ment, acts as customer. The “customer” is coached as to the 
proper points to bring out in the course of the sale so that 
the demonstration will be of the greatest value to those 
participating. 

A discussion of the sale is conducted afterwards. Naturally, 
a difference of opinion frequently arises as to the best way 
of handling a particular situation and customer. Such a 
discussion is stimulating to all concerned. 

TRAINING EXECUTIVES 

The hardest and one of the most necessary tasks in educa¬ 
tional work which a store must undertake is the training 
of its executives. Methods differ a great deal. One depart¬ 
ment store has a most interesting and effective course. In 
order to select applicants for this course, the executives of the 
store meet and decide on members of the organization whom 
consensus of opinion agrees have potential possibilities for 
higher positions. These people are informed of their selec¬ 
tion. The teaching of this group is done by the executives 
of various departments in the store. The lessons which they 
give are supervised by and planned with the training division. 
In this way the training division teaches the executives, who 
in their turn train those under them for advanced positions. 
These courses have been most successful. At the end of each 
course five or six out of the group are promoted. Care, of 
course, is taken to limit the number taking the course to the 
probable number of promotional opportunities which will 
occur during the year. 

Special Executive Curriculum.—An excellent course of 
training has been mapped out by one New York store for its 
potential executives, in which the topics treated are as follows: 


EDUCATION AND TRAINING 


519 


I. Subject Matter. 

1. Purpose of the course. 

2. Store organization. 

3. Merchandise terms. 

4. How stocks are influenced by purchase and sales figure com¬ 

parisons. 

5. The store’s merchandising policies. 

6. Relations between buyers and manufacturers. 

7. Information on which to base buying. 

8. How to determine the quantity of merchandise to be purchased. 

9. How to place orders. 

10. How to create and supply artificial demands—buying and sell¬ 

ing for special sales. 

11. A proper estimate of your competitor. 

12. The general manager’s office. Cooperation. 

13. The importance of knowing your business. 

14. Relation of department manager to salesclerks. 

15. Reserve stock and forward stock. 

16. Increasing the volume of sales. 

17. Receiving and pricing of merchandise. 

18. Clearing stocks. 

19. Store personality. 

20. Advertising from the department manager’s standpoint. 

21. The meaning and purpose of merchandising. 

22. Functions and policies of the advertising department. 

23. Weekly stock movements and inventory. 

24. Functions and policies of the employment department. 

II. Schedule of Lectures—Preparatory Training for Executive 

Positions. 

1. Introduction. 

a. Opening exercises. 

b. Lecture—The General Policies of the Organization. 

2. Business Arithmetic, Part I. 

a. Selection of auxiliary course. 

b. Relation of figures to every-day business. 

c. Percentages. 

3. Business Arithmetic, Part II. 

Percentages, Mark-ups, Mark-downs, Help and Advertising. 
Percentages, Gross and Net Profit. 

a. Explanation of Buyer’s Weekly Statements. 

b. How to compare figures of the current year with those of the 

previous year. 

a. Mark-downs and their relations to our general policies. 

b. Principles of the organization’s cash buying, cash selling and 

underselling policy. 


520 


THE MERCHANTS’ MANUAL 


a. Reason for different profits in different departments. 

b. How to determine the selling price of merchandise, with a view 

to the required percentage of Mark-up. 

4. Relation of Buyer to Manufacturer and his Representatives. The 

correct moral standard of a Buyer in his dealing with manufac¬ 
turers. 

Duties and obligations of the Buyer in his dealings with manu¬ 
facturers. 

Reasons on which to base buying: 

a. How to supply demands for staple merchandise, high-priced 

merchandise, and goods subject to style. 

b. The importance of Call Slips and general Buying Information 

from the heads of Stock and Salesclerks. 

c. How to create and supply artificial demands. 

a. How to obtain special prices and other concessions from manu¬ 

facturers. 

b. Buying for special offering and dangers which are to be avoided. 

c. Reason for preference of the organization’s own merchandise. 

5. Receiving of merchandise, examining merchandise, pricing. 

Reserve and forward stocks, the dangers of reserve stocks. 

Display of merchandise in forward stock. 

The principles of good stockkeeping. 

a. How to handle normal selling and Special Sales. 

b. The right policy in regard to bargain tables. 

6. The Training of Salesclerks by the Department Manager. 

The need of dignifying selling as a profession. 

How does the Department Manager obtain the best results from his 
Salesclerks? 

a. Advertising from the Department Manager’s standpoint. 

b. Why does a department decrease in sales and what can be done? 

a. The functions and policies of the General Management and its 

representatives. Cooperation on the part of the Department 
Manager and the results. 

b. The value of Esprit de Corps. 

a. Safe proportions between existing stocks and prospective buying 

and selling. 

b. How to figure buying limits in their relation to end of the 

season. 

c. Turnovers. 

d. How to increase sales without increasing stocks. 

a. Mark-downs and slow moving merchandise. 

b. How to keep stocks moving and how to treat old season letters. 

c. The merchandising advantage of departments without much old 

stock. 


EDUCATION AND TRAINING 


521 


a. Relation between original Mark-ups and ultimate gross profit. 

b. Explanation of the Department Manager’s weekly statement. 

c. Symptoms of business conditions as they appear on the weekly 

statement. 

The Assistant Buyer.—A great deal of the executive 
material will be found in the ranks of the assistant buyers, 
and therefore many progressive stores have organized courses 
of training for them. This course is planned in close coopera¬ 
tion with the merchandise managers whose judgment as to 
subjects to be presented and discussed largely shapes the 
course. The education director works over the plans and sub¬ 
mits them for approval; helps the speakers who may not be 
accustomed to presenting material in planning their talks so 
that they will be clear, interesting, and adequate, and in some 
cases holds review conferences with the group. 

Wherever a training course of this kind has been attempted, 
it has been considered exceedingly worthwhile. The beneficial 
results are: 

1. The developing of understudies who are really able to 
assume the buyer’s responsibilities in his absence, and who 
constitute good promotional material. 

2. A thorough understanding of the scope of the position 
of assistant buyer and a knowledge of the purpose and use 
of the forms required by the merchandising system. 

3. An understanding of technical terms. 

4. A crystallization of the firm’s policies and principles. 
Needed uniformity in certain directions is often brought about. 

5. The assistants appreciate being taken into the confidence 
of their superior officers and, as a result, they feel increased 
self-respect as well as greater respect for their work; a new 
enthusiasm and ambition are developed; and a greater sense 
of responsibility leads to far more effective cooperation. 

Excellent examples of outlines of courses for assistant 
buyers that have been used in various organizations may be 
found in the February, 1922, issue of the Prince Alumnae 
News. 


CHAPTER XXXIV 


RECORDS AND PROMOTION 

It is advisable to centralize the keeping of employees’ 
records in the personnel department. These employee records 
are the foundation of the rating system. 

RATING 

Two distinct types of data are necessary to compose the 
rating schedules which form indices of the value of each 
employee to the organization by supplying an up-to-date 
history of everything that has transpired. 

First is the record of facts which any clerk can enter from 
reports made by the timekeeper (of punctuality, attendance, 
etc.) and the statistical office, or whatever office is concerned 
with reports of sales, errors, etc., in any particular organiza¬ 
tion. These records of facts are purely matters of fact, involv¬ 
ing no personal judgment. 

The second type of entry on the rating card is that depend¬ 
ing on personal opinion, that is, a judgment of the employee’s 
personality, personal appearance, cooperative spirit, etc. It 
is impossible to have an effective rating system without tak¬ 
ing into consideration these important qualities which must, 
of course, be based on opinion. The impartiality of the judg¬ 
ment rendered must be preserved by receiving more than one 
opinion and averaging the results. In a large organization it 
is more practical to have these opinions from several people 
directly in touch with the employee, such as the buyer and 
the aisle manager, than to depend for impartial treatment 
on a committee made up of people who are not in intimate 
touch with the employee’s work. 

Determination of points on which the individual should be 
rated is an important process in creating a successful rating 
system. There are certain factors which should govern the 
selection of these points: 


522 


RECORDS AND PROMOTION 


523 


hotels 


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8 318 


Application for Position, L. S. PLAUT & CO. f Newark, New Jersey 
Name 


Date. 


192 


Address 


Department — 
Time clock No. 
Sales No.— 


Maiden Name 


Nearest Telephone No. 


Trade 


Position applied for 


Age 


Department desired: 1st choice 


2nd choice 


3rd choice 


Have you worked here before 


If so. in what department 


How long, 


Reason for leaving 


With whom do you live 


Married l~~l Single (~1 Keep house I I Board Q 


Live with | | 

Parents I-1 


How many are dependent upon you for support 


Number of children 


Salary expected 


Salary Received In 
Last Position 


Last 

Employer 

Previous 

Employer 

Previous 

Employer 


Name 

Your 

Position 

When did you leave 

Address 

How long employed 

Name 

Your 

Position 

When did you leave 

Address 

How long employed 

Name 

Y our 
Posuioo 

When did you leave 

Add rest 

How long employed 


Reason (or leaving 


Reason for leaving 


Reason for leaving 


IN SPACES BELOW GIVE NAMES AND ADDRESSES OF PERSONS—NOT RELATIVES OR FORMER EMPLOYERS 
WHO HAVE KNOWN YOU FOR MORE THAN ONE IfcAR. IP POSSIBLE, NAME A PROFESSIONAL 


NAME 

ADDRESS 

you loft school ? _ _ _ 

What trrnda of school were 
you 10 when you left T 



Varna of School 



Address of School 



What studies did 
you 1 lice best ? 



W Dat courses have you taken 
store leaving school » 


TO BE FILLED OUT BY APPLICANTS UNDER 21 TEARS OF ACE 


In consideration of employment by L. S. PLAUT & CO., I agree to obey their roles and regulations, and enroll a* a member of L. S. PLAUT A CO.’S Employees 
Mutual Aid Association, subject to its constitution and by-laws. This agreement can be ended at any time by either L. S. PLAUT A CO. or me. and wagea will be paid 
pro rata (or aerviccs rendered. 


DaTI- 


Dspt. 


Signature of Applicant, - 

Salary per week- Signature of Employment Manager,. 


NAME 



EMPLOYED 

REENGAGED 

RE ENGAGED 

RE CNQAGCO 

REENGAGED 

RE ENGAGED jj Re CNSAOBP 


JAN 


FEB 

N 

ARC 

H 

APRIL 

MAY 

JUNE 

JULY 

AUGUST 

SEPTEMBER 

OCTOBER 

NOVEMBER 

DECEMBER 


| 1*10 

ISJ' 

ISJJ 

•»J0] 192 ' I l »2J 

' * JO 

• tl' 

< *11 

1 *20 

1 92 1 

' SJl 

• 920 

• SJl 

i tti 

1 1 *20 

i»j i 

l*J! 

l»J0 

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• s; j 

• SJO I HJI 

1 92 2 

1*10 

192 t 

• * J J 

• *I0 


>»JJ 

|I»10 

'SJl | 1*2J 

1920 

l'» " 

• «j; 

SALARY 





































SALES NO. 



















* 


















DEPT 































— 






PRY. EXAM. 





































BALES 





































STOCK WORK 





































APPEARANCE 





































PUNCTUALITY 





































ATTENOENCE 





































ACCURACY 





































TOTAL 





































RATING 



















— 


















MONTH 


(MOUNT OF S 

> 

r 

m 

v> 

R B S a COM 

SE 

LLIP 

40 PERCENTAGE 

DEPT PERCENTAGE 

ABSENT OR TARDY 

ERRORS 

= - 


1020 

1921 

1922 

1920 

192! 

1922 

1920 

1921 

1922 

1920 

1921 

1922 

1920 

1921 

1922 

1920 

1921 

1920 

A 

T 

A 

T 

A 

T 

JAN 





















* 

FEB 






















MARCH 



















' 



APRIL 






















MAY 










r-- 












JUNE 






















JULY 






















AUO. 





















• 

6EPT 






















OCT 






















NOV 






















DEC. 






















TOTAL 









I 

i 












Fig. 102.— Rating form. 








































































































































































































































































524 


THE MERCHANTS' MANUAL 


1. They should be points fundamental to the position under 
consideration. 

2. They should be few in number. 

3. They should involve the minimum amount of clerical 
labor compatible with the desired result. 

4. They should eliminate the element of personal reaction 
as far as possible, remembering always that rating is a matter 
of personal opinion guided by certain standards. 

In order to assure the employee of fair treatment, after the 
rating of the employee has been given by the employment 
department in conjunction with the division superintendent 
and the buyer, it should be gone over again by the rating 
committee. This committee is ordinarily composed of the 
personnel director, the employment manager, the educational 
director, and the store superintendent. These executives have 
a sufficient knowledge of the people and a breadth of view 
essential to the impartial consideration of each case. 

The value of a rating system to an organization may be 
summed up as follows: 

1. It gives knowledge of the employee’s work and character 
to the organization. 

2. It develops the individual through analysis. 

3. It checks the work of the personnel department. If, 
after employees are rated, it is found that a large number are 
weak in salesmanship, it shows the educational division where 
to concentrate training. It reveals the weakness and the 
strength of employees individually and as a whole. 

4. It places promotion, transfer, and discharge on an equit¬ 
able basis. 

The Rating Form.—Rating forms differ in almost every 
store, both in contents and in method. 

Figure 102 shows the rating form used by the L. S. Plaut 
Company, of Newark, New Jersey. It is printed on the back 
of the application envelope, thus having the two-fold advantage 
that all information relating to each salesperson is on one 
blank and all unnecessary clerical labor eliminated. Em¬ 
ployees are rated on six points, each of which has a certain 
value, as follows: 


RECORDS AND PROMOTION 


525 


1. Sales.45 

2. Stock work.20 

3. Appearance.10 

4. Accuracy. 5 

5. Attendance.10 


6. Punctuality.10 

A perfect record would give 100 points. 

1. Sales. The following factors are considered in rating an employee 

on sales: 

A. Selling cost. The individual selling percentage is compared with 

the department’s average selling percentage. Allowance is 
made for the variation in cost in the different sections of the 
selling departments. 

B. Salesmanship. The type of salesmanship is also considered. 

For example, the man whose selling percentage was the lowest 
in the department might be marked “excellent” if only his 
selling cost were considered, but if the type of salesmanship 
which he renders is in any way detrimental to the department, 
his rating is lowered. 

2. Stock work is rated on both quantity and quality. 

3. In appearance there are three points considered: 

A. Adherence to dress regulations. 

B. Neatness. 

C. Cleanliness. 

4. For each time absent from the store one-half the rating for at¬ 

tendance is deducted. 

5. Each time the employee is late, one-half of the rating for punctuality 

is deducted. 

6. Accuracy rating is based on the error records kept in the educational 

department. 

Sales, stock work and appearance are rated by the buyer, 
the division superintendent or aisle manager, and the employ¬ 
ment manager. 

Attendance, punctuality and accuracy are all rated from 
records in the personnel department. 

Figure 103, the rating card used by James McCreery and 
Company, is quite different. There are four main divisions— 
quality, quantity, experience, and cooperation, with a possible 
twenty-five points to gain in each. 

Quality is divided into accuracy, which nets ten points, and 
neatness, courtesy and initiative, each netting five points. 
Quantity represents the actual sales made. 







526 


THE MERCHANTS’ MANUAL 


Experience includes knowledge, which is rated at twenty 
points, and adaptability, which counts for five. Under knowl¬ 
edge information on store system, stock, service, etc., is 
counted. 

Cooperation is divided into willingness and reliability. 

Accuracy in rating is obtained by having the department 
head, the assistant department head, the section manager, and 


No 

JANUARY , 


FEBRUARY 


MARCH 

T3 

a 

W 

Q 

■a 

<l) 

n 

Q 

< 

Section Manager 

Floor Sup’t. 

Reconciled Rating 

Office Merits 

Office Demerits 

[ Net Rating 

-a 

a 

W 

ft 

Q 

w 

"a 

V 

Q 

< 

PSection Manager 

A 

3 

GO 

o 

O 

£ 

Reconciled Rating 

Office Merits 

Office Demerits 

Net Rating 

T3 

w 

*b. 

V 

Q 

73 

W 

"o. 

V 

Q 

< 

| Section Manager 

A 

CO 

o 

o 

£ 

Name 

Street 

City 

Engaged 

Month 

QUALITY 


Accuracy 

10 





















Neatness 

5 





















Courtesy 

5 





















Initiative 

5 











































QUANTITY 


25 





















EXPERIENCE 























Knowledge 

20 





















Adaptability 

5 











































COOPERATION 

Willingness 

10 





















Reliability 

15 





















TOTAL 






Fig. 103.—Rating card for workers. 


the floor superintendent give their ratings. If there is a wide 
difference a meeting is held and the matter discussed. Other¬ 
wise the various ratings are averaged. Evidence from the 
records gives the final check on the rating. All errors, for 
example, have been noted and are included in giving the final 
rating. 

Figures 104 A, B and C show the central record card used 
by a large department store of Newark, N. J., in measuring 
the value of the various employees. 

These three systems, in many ways so dissimilar, will afford 


















































RECORDS AND PROMOTION 527 

an idea of the possible range covered by rating systems in use 
at present and giving satisfactory results. 

Error Records.—In order to have the store system under¬ 
stood and carried out, the error follow-up system is carried 
on by the educational division. The error system, as gen- 



8 O K> M 1* 


Jdate 

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J 


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REASON 

SALARY 

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NUMBER 

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OCT <X* N |M(ST „, fP — M ' t 'oV • P * PT - 


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ttNtilirWTE 





























! PHV. EXAM 






























TRANS* 


SALES 

DM) 

SALARY 

COMM. 

E. C. 

TOTAL 

EARNENG5 


NO 


AMT. 

ner. 

SALES 

PAYS 

SALARY 

COMM. 

E. C 

TOTAL 

EARNING! 

c °xl 

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M 




























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J 
























































A 




























s 




























0 




























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D 




























J 




























































HE 

AL 




RV 

CO»- 



T 

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nPr'l 

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c 

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5 

Is 

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OTA t. 
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E 

F 




























M 




























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M 


























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J 


























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A 




























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0 























































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D 




























J 



























\ 

























y 


Fig. 104-A.—Central record card. 


erally carried out, undertakes to discover by whom mistakes 
on the saleschecks were made so that these individuals may 
be instructed and corrected. 

In most stores, all departments, desks, or offices, which 
receive any portion of the salescheck are asked to scrutinize 
































































































































































528 THE MERCHANTS’ MANUAL 


A ILU 

e i*_t (m.a \ 
C LW A8. 

D oTmer A0, 


G <500O 6 R 

(=■ FAIR 3.R 

n» poor, s.p 
S SUGGESTION 


1 MOfcMN# LATE 

2 NOON LATE • 

3 TIME Card 
■4 DCPT SmEKT 


feq. 


MAS. 




5 wConG NAME '*AP, *> REGISTER. DISCREPANCY 

<s TAl • ERROR IO MISCfUANEOUS 

TT WRONG f”*£AS CR MOST. It CA'j'tlF.R'S DISCREPANCY 
JJ S,' f. Mo. ON Tl MET ir*VNOCfc OR. OVERCHAPflf: 

e»ec. 


f>EPV. 


O C t. 


NOV. 


SAtES COvQ-,c 


CNTXRmiii««i Aftit'ty 


L,. BAMBERGER Co. ncwark ai. a 


JAN FEB. . APR. T-G /W JUN 


UU'T' AUG - SCP^ OCT. MOV. X>eC 


4^ 

3*- 
29S- 
I* - 

Dt^r av- 

i% - 

23>- 
3*3- 
4% - 


FMAno J A 3 Q N Dvjer-IAMOUASON D J FMAMUUASOC4DJFMAMUO A 5 O M D -J 














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n 

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t 



. 

































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- 


19 


• 9 


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- 

- 




— 




- - 


- 

Ltd 

-■ 

•H 

-i_ 

-■ 

— 

... 


l< * F /04 4 ?«■ 




Fig. 104-B.—Central reco.d card. 


A - Above Average B-Average C-Belo« Average D-Unsatisfactory 


No. 

Salary 

Number 

Bate 192 

Mr. 

Bate of 
Employ¬ 
ment 

Courtesy 

£ 

to 

3 

T3 

P 
>—< 

—«to 
a o 

la 

£ a 

a«/S 

o» 

&J3 

§ *o 

cw 

J 

**-4 Ui 

2-g 

33a 

—1 

Present 

Salary 

Bo you recommend an 
Increase in salary? 

I f bo, bow much? 

-s 










-- 

































Head of Bejartmont 


Fig. 104-C.—Central record card 







































































































































































































































































RECORDS AND PROMOTION 


529 


PENN TRAFFIC CO. 

Salesperson .. 

daily report on errors 


Month --- 


Date . 

l 

2 

3/ 


SALES>CHECK ERRORS 





1 Addition Incorrect 

! 




2 Amounl»Reoeived Incorrect 





3 Amt. Omitted on Sale*iTicket or Duplicate 





4 App. T.clc‘1 not (irop. m’k’d cash. chg. or ret’d 





5 Book Number Omitted 





6 Bougbtyby Omitted 





7 Check. Number Omitted 





8 Customer’s Name Mis-spelled 





9 Correction op'Originel and Not on Duplfteate 





10 Correction on Duplicate and Not on Original 



r 


11 Credit^Memos Not sent in or Late 


i 


12 Department Number Omitted 




13 Date Omitted 





14 Discount Incorrect 





15 Delivered Omitted 





16 Extension Incorrect 



j 


17 Figures Illegible 



A 


18 Floorman’a Signature Omitted 



n 


19 How Sold Incorrect 



A 


20 Merchandise Mis-spelled on Ticket 





21 Merchandise Omitted or in Excess 



f 





11 





/ 





/ 


25 Occupation Incorrect 


t 



26 Part,of,Citv Omitted 



7 


27 Price Incorrect 





28 Street or Number Incorrect 


l 


29 Salesperson’s-Number Incorrect 




30 Street Mrs-spelled 





31 Soles Book Index—Amount Omitted 



7 





r 


33 Voids—Neglect to Mark Orig. or Dup. Void 




34 Wrong Ticket Voided 



\ 





A 





/ 


CASHIER S ERRORS 



( 


1-Cashier Out of Station 



4 


2 Cashier Fails to Receipt Ticket 



J 


3 Cashier Receipts Chnrge'-Ticket 



/ 


4 Name on Addr. T’k’t not same as Sale» T’k’t 



/ 


5 Pas*w8ook Not Delivered with Merchandise 





6 Sales^Slip not Delivered 



A 


7 Wrong Merchandise Sent 





8 Pass-Book Added Incorrectly 













/ 


GENERAL ERRORS 



f 


1 Customers Directed Wrong 



\ 


2 Delivered Late or Not as Promised 



\ 


3 Filling Otders Incorrectly 



/ 


4 Inattention or Discourtesy in Store or Tel. 



\ 


5 Mdse, in Bad Condition when Delivered 



( 


6 Merchandise Omitted or in Excess 



\ 


7 Mdse. Passed byChecker Without SalesSlip 



D 


8 Solicitor Failed to Call 



1 


Fig. 105.—List of errors made by employees. 











































































































530 


THE MERCHANTS ’ MANUAL 


it for certain errors. The list of errors is hardly ever the 
same in two stores, but each store makes a list of those errors 
which in its opinion are most serious in their effect on the 
public or in their tendency to retard and block the system. 
One large store lists only 12 errors, while another, not so 
large records 57. Figure 105 illustrates a list wherein most 
errors likely to be encountered are allowed for. 

Certain errors such as “sales number omitted,” “incorrect 
address,” and “wrong extension” are common to all stores, 
while others may be peculiar to individual stores. 

Whenever an error is detected by anyone it is recorded by 
code together with the number of the salesperson responsible 
for it, the department number, and the number of the sales- 
check. The records of different stations which check the 
errors are turned over daily to the educational department 
whose business it is to do the important “follow-up” work. 

Checking Errors.—There are five places where errors in 
saleschecks may be discovered—by examiners, by the charge 
office, by the auditing office, by the cash room, or by the ship¬ 
ping room. The work of each office determines which errors 
shall be checked, as, for example, in the following case of a 
store listing twenty-eight errors. 

EXAMINERS 

XI—Date omitted X8—Price tag missing 

X2—Sales number omitted X9—Name and address omitted on 

X3—Wrong price on merchandise enclosed package (sent) 

X4—Merchandise missing or extra X10—Sent address omitted on body of 
X5—Floor Supt’s signature missing check 

X6—Record of extra package XI1—Charge address omitted on back 

missing of shipping ticket 

X7—Price reckoned incorrectly X12—Under or over measurement 

(X10 and Xll apply to sales charged to one address and sent to another) 

CHARGE OFFICE 

Chg. 1—Name misspelled Chg. 5—Floor Supt’s signature omitted 

Chg. 2—Wrong name Chg. 6—Sent address omitted on body 

Chg. 3—Wrong initials of check (chg. to one, sent 

Chg. 4—Purchaser’s name omitted to another) 

Chg. 7—Customer’s signature omitted 

AUDITING OFFICE 


A1—Wrong entry 
A2—Item omitted 


A3—Name of city omitted on record 
A4—Transfer number omitted on record 




RECORDS AND PROMOTION 


531 


CASH ROOM 

Cl How sold or amount received C3—Wrong carrier used 

omitted C4—Total amount omitted 

C2—Wrong amount entered 

S HIPPING ROOM 

SI—Incorrect address 

It will be noted from the above that examiners are held 
responsible for checking and reporting twelve salescheck er¬ 
rors, numbering those which their work brings most naturally 
to their attention. The charge office is responsible for check¬ 
ing seven, the auditing office for four, the cash room for four, 
and the shipping room for one. An effort is made to include 
all the most serious errors and yet to keep the system from 
being too burdensome to carry out. 

Previous to the installation of this error system there had 
been little attempt to correct bad habits of check writing, and 
the results obtained by the error system are exceedingly 
instructive. 

The first month that the system was in full operation the 
total number of recorded errors was 13,115, and the propor¬ 
tion of errors to number of sales transactions was .045. That 
is, out of every hundred saleschecks, four or five were defec¬ 
tive. One year later, as the result of persistent follow-up, 
both with the departments as a whole and with individuals, 
the total number of errors for the same month was 3,015, and 
the percentage of errors to sales transactions was .010. The 
records of some of the departments showing most marked 
improvements are as follows: 


Before Error 

After Error 

System 

System 

502 

141 

383 

48 

243 

16 

104 

21 

232 

26 

301 

25 

456 

62 

160 

8 

97 

4 

835 

46 

519 

22 




532 


THE MERCHANTS' MANUAL 


Types of Errors.—While it is not possible to make any 
hard and fast division between errors which are serious and 
those which are mere technicalities, one store has divided 
errors into major and minor categories, as follows: 


Major Errors 


Minor Errors 


Wrong name and address 
Omit aisle manager’s signature 
Wrong addition or subtraction 
Wrong extension 
Wrong measurement 
Mismates (shoes) 

Checks held 
Checks missing 


Poor writing and figures 
No money sent with check to tube room 
Omit how sold or amount received 
Omit date 
Wrong carrier 

Wrong amount of merchandise 
Tallies incorrectly filled 
Tallies incorrectly totaled 


Cash Register Error System.—The question of shortages 
and overages by clerks using cash registers has become a 
serious problem. Although adequate training may do a great 
deal towards eliminating this inaccuracy, the training should 
be accompanied by an error system. 

Accurate statistics should be kept of each individual’s mis¬ 
takes, and these mistakes should be pointed out daily to the 
salesperson. If necessary she should be called to the training 
division where the reason for the mistake should be explained. 
If necessary, the use of the cash register should be re-taught. 

Some stores issue a monthly record of mistakes to their 
employees. This may be either posted on the bulletin board 
or published in the house organ. 

There is often a bonus connected with a perfect cash register 
record at the end of a period of time. The success of the 
error system lies in the constant repetition of the correct 
method of using the register, and the daily follow-up. 

Errors by Examiners.—While errors in the saleseheck by 
salespeople are the most important in their effect on the 
smooth operation of the store, there are error systems appli¬ 
cable to other classifications of the personnel. For example, 
stores which use examiners find it very profitable to employ 
an error system based on the following mistakes: 

1. Poor Wrapping. 

2. Use of “other goods” Stickers.. ; 

3. Incorrect comparison of checks. 







RECORDS AND PROMOTION 


533 


4. Address not Stamped “Paid” or “Ch’ge 0. K.”. 

5. Careless Examination. 

6. Crossed Address Slips. 

7. Charge sent as C. O. D. 

8. C. O. D. sent as Charge... 

9. Other Merchandise Enclosed. 

10. Neglect in Using Stamps. 

11. Personal Appearance.„.. 

12. Desk and Supplies. 

13. Attitude and Conduct. 

Late. 

Absent. 

Dismissed. 

Remarks. 

Error System for Floor Superintendents.— The error 
system has been extended even to the floor superintendent. 
The following system is applicable wherever the floor super¬ 
intendent is responsible for refund slips. Errors likely to be 
committed are as follows: 

A. Date omitted. 

B. Name omitted. 

C. Street omitted. 

D. House number omitted. 

E. City omitted. 

F. State omitted. 

G. Date of purchase omitted. 

H. Code omitted. 

I. Code incorrect. 

J. “Exception” not written. 

K. No reason given for exception. 

L. “Allowance” not signed by head of adjustment bureau. 

M. No signature after “received in department by.” 

N. Signature of extra salesperson after “received in department by.” 

O. Amount of refund not written in words. 

P. Employee’s refund not marked “Net” or “Less 10 per cent.” 

Q. Illegibly written. 

The results of this error system for one month are shown 
in Table XXIV. 

Rewards—Several stores make a policy of giving a reward 
in recognition of freedom from errors and high rating other¬ 
wise. L. Bamberger and Company have a merit system 
whereby a person who has made no errors and who has not 
been absent or tardy during a given month is granted a half- 
















534 


THE MERCHANTS MANUAL 


Table XXIV. —Number and Kind of Errors made by Floor 
Superintendents on Refund Slip During October, 1922 



A 

B 

C 

D 

E 

F 

G 

H 

I 

J 

K 

L 

M 

N 

0 

P 

Q 

Total 

Allen. 






4 

3 



5 



1 





13 

Atwood. 

1 





3 

4 



4 








12 

Burns. 







2 




4 


1 


1 



8 

Butler. 

1 









3 


1 






5 

Connelly.... 







5 









1 


6 

Cutting. 






5 




2 

2 




1 



10 

Drake. 



















Dwyer. 







2 




1 







3 

French. 

2 





3 




4 








9 

Green. 















1 

2 


3 

Griffin. 


1 





3 











4 

Harris. 






3 












3 

Hill. 










2 








2 

Kelliher.... 






4 




3 





2 



9 

Kelly. 



















Kline. 

1 





3 

1 



2 








7 

Leet. 











1 







1 

Lawrence. . . 






2 

1 



4 








7 

Mills. 






3 












3 

Total... 

5 

1 




30 

21 



29 

8 

1 

2 


5 

3 


105 


day’s holiday. If the record is maintained for twelve consecu¬ 
tive months, a medal is awarded and a cash bonus. 

Another store gives an extra half day’s pay for a month’s 
perfect record as to attendance and errors. If an entire de¬ 
partment maintains a perfect record for a month, each member 
receives a full day’s additional pay, half being for her indi¬ 
vidual record and half for the department’s. 

PROMOTION 

It is exceedingly important that the promotion policy of a 
store be understood thoroughly by all the employees. For 
example, some stores have a policy that all promotions shall 
be made from within the store. In other words, to reach an 
executive position, an individual must climb the ladder from 
the bottom. In other stores outside help is employed when¬ 
ever it is judged expedient. The best policy is to give first 
choice to the store’s own employees, but if the available talent 
is not present, to seek for it elsewhere. 

Promotions may take place within or without the depart- 












































RECORDS AND PROMOTION 


535 


ment. Since there are only a limited number of executive 
positions within the department, advancement for some must 
lie outside. 

Figure 106 shows the regular line of promotion in a typical 
store. For the salesperson the normal line of promotion is 
to head of stock, assistant buyer and buyer. Promotion in 
selling itself is often from one department to another. 

Promotion for juniors follows the line of messenger, parcel 
inspector, and stock girl. From the last named position, she 
may either go into the non-selling departments of the store, 
or the selling departments. 


Designer | 


Millioery~| 


Ll£ffve r J ' Head ? f S - M l | Assistant Beyer | 

j Head of Stockj 


| Alteration | 


Uvi 


Stock Marker | 


Employ- 

tiaing_ 

Charge 

Main {Auditing 

Merch- 

oidiie. 

sta Sir 

,-iSBkni... 

Bill | Pay 


| Cashier | 


I Stamp I 

~L\ 


[ Teleph 

Opera. 


(Gilchrist Company ) 


Fig. 106.—Promotion chart. 


Promotion is, or should be, based upon the rating system, 
which shows the ability and the history of the employee’s 
connection with the store. The employee should understand 
that her opportunity lies wholly with herself. This tends to 
secure the employee’s good will and increase the loyalty of 
the force as a whole. It will also cause a decreased labor 
turnover. 

In any method of promotion, salary adjustment is vital. 
There are two methods which have proved satisfactory: 

1. The establishment of certain definite dates when every 
employee is considered for an increase, with exceptions which 
must be considered between these periods. 

2. The policy that each employee is considered a certain 









































































536 


THE MERCHANTS ’ MANUAL 


number of months after the date of employment and at regu¬ 
lar intervals thereafter. The impression on the employee of 
giving an increase in wages without request cannot be over¬ 
estimated. 

If the increase is not given, it is equally important to have 
the employee told just why it was not earned in order that 
she may know in what direction it is essential to improve. 

A complete discussion of methods of remunerating store 
employees is given in the following chapter. 

Transfer.—Transfer is a development of placement and 
may or may not be in the nature of a promotion. Often after 
the initial placement the employee is not satisfied or does not 
fit. When placed in another department she is markedly 
successful. Frequently also a person who has made a success 
in one department has a pronounced desire to be transferred 
to some other department. 

Transfers should be carefully considered. If the reason 
for the desired transfer is due to unsuccessful adjustment, it 
is very likely that the same trouble would occur wherever the 
employee was placed, and it is more profitable to point out 
to the employee from her rating card just where her weak¬ 
nesses lie. 

In many cases transfers are promotions. It is well known 
that certain departments do not offer the same advantages 
to the salesperson as others, and a transfer to a department 
offering better opportunities should be viewed in the light of 
a promotion and treated as such. 



CHAPTER XXXV 


REMUNERATION OF EMPLOYEES 

The importance of compensation in the personnel plan of 
the retail store should never be underestimated. There are, 
according to Dr. B. M. Rastall, who made a careful study of 
compensation methods for the National Retail Dry Goods 
Association, certain essentials in any payment system which 
must be present to offer the best stimulus to effective work: 

1. It must pay a fair wage. 

2. It must offer to employees the highest range of com¬ 
pensation which they are capable of earning, consistent with 
increased returns to the store. 

3. The system must be satisfactory to employees. 

4. The system must be understood by employees. Prac¬ 
ticality takes precedence over the accuracy which might be 
attained by complicated methods. Since stimulation of the 
employee is the end in view, and this stimulation can never 
be obtained by a system not understood by the employee, the 
aim is always to provide a simple working plan. 

The most progressive stores stimulate the employees to 
their best efforts by allowing them to share by bonus or com¬ 
mission in the profits secured to the store by their efficiency. 
The purpose is: 

1. To give the employee the highest compensation which he 
is capable of earning. 

2. To increase the profit to the store by the results of better 
salesmanship. 

3. To give to customers a share of the benefit, through the 
decreased prices possible only through decreased total costs of 
distribution which partly result from operation of such a plan. 

Many stores have not as yet permanently systematized 
their methods of payment in either the selling or non-selling 

537 


538 


THE MERCHANTS’ MANUAL 


divisions, but the process of installing adequate systems is 
rapidly progressing. 

The most common systems of wage payments in use at 
present may be classified as follows: 

1. Straight salary. 

2. Straight salary supplemented by a commission on all sales. 

3. Straight salary plus bonus. 

4. Straight commission on all sales. 

5. Flat quota throughout the year with commission on excess only. 

6. Varying quota adjusted according to selling costs with a varying 

rate of commission. 

7. Profit-sharing plans. 

Straight Salary.—Payment of a straight salary represents 
the most primitive form of payment for services rendered. 
The salary is usually determined by the market rate for the 
particular position. This system is well adapted to the lower 
grade retail store where inexperienced persons are employed. 
For example, where the nature of the business requires a very 
low overhead expense, such as in many neighborhood stores, 
and in variety stores, the wage at market rates is the cheapest 
method for the store. Selling effort is hardly ever required. 

The salesclerks usually live in the immediate neighborhood 
of the store. In many cases they are young girls and boys 
under twenty-one years of age. 

It is interesting to note, however, that where a store is large 
enough to employ ten or fifteen salespeople a wage plan 
which includes extra payment for extra efficiency on the part 
of the salespeople has worked out very successfully. Even 
though profits to the store may not be appreciably increased, 
the labor turnover, large in this type of store, is materially 
decreased. 

Straight Salary Plus Commission.—The commission plan 
of payment may be defined as “a percentage paid to indi¬ 
vidual salespeople on their total sales.” In order to class as 
commission payment under this definition, percentages must 
be paid on all sales and not simply on some part. Hence any 
system which establishes a quota, paying only on sales in 
excess of this amount, or which pays only on certain classes 
of sales, would not be called commission. It is immaterial, 


REMUNERATION OF EMPLOYEES 


539 


however, whether the commission paid is in total compen¬ 
sation, a percentage amount paid in addition to salary being 
classed as commission if paid on all sales. 

The commission paid as part compensation in addition to 
regular salaries is well developed in retail stores, with a great 
variety of detail as to percentage amounts, methods of deter¬ 
mination, and payment. About half the stores using com¬ 
mission plans pay flat rates without variance. The rest pay 
commissions varying with the specific department. In some 
stores commissions are paid only in special departments. Few 
stores on the commission basis allow for special seasonal 
variations. 

Table XXV shows percentages of commissions paid by a 
large Eastern store in the various departments. 


Table XXV.— Commissions Paid in Eastern Store 


Departments Percentages 

Kid Gloves. % 

Junior Gloves. % 

Fabric Gloves. % 

Neckwear, Linen Collars, Ties, etc. % 

Neckwear Over 50c. % 

Marabous, Scarfs, and Ruffs. Vz 

Hosiery . % 

Veilings. % 

Misc. Jewelry. % 

Watches. % 

Gold Jewelry. % 

Leather Novelties, Purses, etc. 1 

Bags. % 

Christmas Cards. % 

Umbrellas, Parasols and Canes. V 2 

Toilet Goods. % 

Women’s Handkerchiefs. % 

Women’s Knit Underwear. % 

Men’s Hats and Caps. % 

Men’s Underwear and Hosiery. 1 

Boys’ Furnishings. % 

Men’s Shoes. % 

Boys’ and Children’s Hats and Caps. 1 

Manicuring and Hairdressing.8 

Hairdresses. 5 

Men’s Barber Shop. 6 V 2 




























540 


THE MERCHANTS ’ MANUAL 


Table XXV.—Commissions Paid in Eastern Store— {Continued) 
Departments Percentages 

Boys’ Barber Shop.. 7 

Shoe Shining Parlor. 5 

Restaurant (Main). lVz 

Captains receive 20 per cent of comm, earnings of dept, 
dividend equally. 

Cafe (Cafe). 1 % 

Corsets and Corset Waists. Mt 

Brassieres and Accessories. % 

Misses’ and Girls’ Underwaists and Corsets..*.... % 

Muslin Underwear. % 

Women’s Petticoats. V 2 

House Garments (Women’s). % 

Women’s Aprons. V 2 

Maternity and Sick Room Supplies. % 

Infants’ and Children’s Furnishings. V 2 

Toys. 1 

Infants’ and Children’s Dresses. % 

Infants’ and Children’s Coats. % 

Infants’ and Children’s Millinery. % 

Infants’ and Children’s Shoes. % 

Misses’ Suits. % 

Misses’ W. M. Dresses, $12.50 (Inc. and Material). % 

Misses’ Coats. % 

Misses’ Skirts. % 

Girls’ Coats. % 

Girls’ Dresses. % 

Girls’ Waists. % 

Misses’ Sweaters. % 

Misses’ and Girls’ Shoes and Slippers..'.. % 

Misses’ and Girls’ Millinery. % 

Women’s and Girls’ Suits under $40. % 

Women’s Coats. % 

Women’s Skirts. % 

Women’s Waists. % 

Women’s Shoes and Slippers. % 

Women’s Customs. x/ 2 

Women’s Extra Size Dresses. y 0 

Women’s Dresses. il 

M. M. Dresses, $1 to $3.95, inc. 14 

Maids’ and Nurses’ Uniforms. y 2 

Women’s Trimmed Millinery. \ 

Basement. 

Misses’ Suits. 3 /^ 

Women’s Suits. % 











































REMUNERATION OF EMPLOYEES 541 

Table XXV.—Commissions Paid in Eastern Store—( Continued) 
Departments Percentages 

Misses’ Coats. % 

Women’s Coats. % 

Women’s Skirts.. y 2 

Dresses to $8. y 2 

Women’s Dresses over $8. y 2 

Women’s Furs. y 2 

Girls’ Dresses. y 2 

Girls’ Coats. y 2 

Waists. % 

Silk Underwear. y 2 

Muslin Underwear. y 2 

Dresses under $2.95. y 2 

Infants’ Furnishings. % 

Corsets. % 

House Garments. y 2 

Petticoats. y 2 

Handkerchiefs... % 

Sweaters. y 2 

Women’s and Children’s Gloves. % 

Men’s Furnishings. % 

Boys’ Clothing. % 

Women’s and Children’s Hosiery and Underwear. % 

Men’s Gloves. y 2 

Men’s Hats. . % 

Luggage. y 2 

Men’s and Boys’ Shoes. % 

Women’s Millinery. % 

Neckwear, Belts and Veils. 1 

Jewelry, Leather Goods, etc. % 

Umbrellas and Parasols. % 

Women’s Shoes. % 

Misses’ and Children’s Shoes. % 

Talking Machines and Skates, etc. % 

Main Store General. % 

Basement General. % 

Henry S. Erb, auditor for Dives, Pomeroy and Stewart, of 
Reading, Pa., says the past year’s costs and sales should be 
used in determining the percentage of labor cost. Once having 
determined this it is possible to put the commission plan into 
use. Figure 107 shows the method of keeping track of indi¬ 
vidual salespersons’ records. The “rate” in this case means the 
base wage paid the individual. The commission is paid on 





































542 


THE MERCHANTS’ MANUAL 


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Fig. 107.—Loose-leaf record of six month’s selling by “John Smith. 






























REMUNERATION OF EMPLOYEES 


543 


total net sales. In this department it happens to be one and 
three-quarters per cent. Thus John Smith earned a bonus of 
$25.33 during the first four weeks of the year, in addition to 
his regular salary of $88. 

Figure 108 shows the form of recapitulating results for the 
benefit of department heads. The narrow portion at the left 
is torn off and posted for the information of employees. The 
right-hand portion is filed. The salary and per cent figures 
cover commissions as well as wages. 

Where drawing accounts are paid and the commissions 
earned do not equal the amounts paid, it seems to be the 
general custom to wipe out the difference at the end of the 
adjustment period, starting the salesman again without handi¬ 
cap, but the drawing account is lowered or the employee 
shifted to another department or dismissed if the deficit recurs 
frequently. 

Straight Commission on All Sales.—The straight com¬ 
mission plan can only be applied to certain departments of a 
store, such as furniture, men’s clothing, rugs, etc. The sales¬ 
person is somewhat above the average and his own personality 
and knowledge of the goods are a great aid in completing a 
sale. 

Such a salesperson is given a weekly drawing account based 
usually on his previous record of sales. He is paid quarterly 
or semi-annually the balance of his earnings in the form of a 
commission. If the total commission does not reach the total 
drawing account, there are two alternatives: 

1. In some stores the drawing account for the following 
weeks is not taxed for the deficiency or difference. 

2. In other stores the salary is paid just the same but in 
reckoning the commission for the next period, the shortage is 
deducted from the average. If the same individual continues 
to fall down over a considerable period, he is transferred or 
dismissed. In this way incompetents are weeded out. 

In some stores the straight commissions in furniture, rugs 
and carpets, and men’s clothing differs with the season. For 
example, in December, January and February, the commis¬ 
sion is 5 per cent while the balance of the year it is only 4 per 
cent. 


544 


THE MERCHANTS* MANUAL 


Dept. A 


Month 

Ending 

1/25 


Dept. A 


Month Ending 1/25/19 


Name 


Williams 

Brown 

Jones 

Smith 


Standing 


Name 


Jones 

Smith 

Brown 

Williams 


Sales 


909.87 
1,447.43 
268.85 
3,092 61 


Days 


2 * 

24 

6 

24 


Salary 


68.20 

113.33 

15.00 

152.35 


Per Cent 


7.5 
7.9 

5.6 
5.0 


Standing 




Buyers will post this report in 
Dept, for clerks’ attention 


T°tnl Sales Total Salary Average Per Cent 
$5,718.76 $350.46 6JL 


«. Perforated loose-leaf record of one department’s selling and the 

wage cost of that selling. Issued at the end of each four-weeks period for 
department head’s guidance. The narrow portion at the left of the perfo¬ 
ration, showing only the standing of the individual salespersons, is torn off and 
posted in the department. The righthand portion is filed by the department 
head for reference. The salary and per cent figures cover also commissions 
(not only weekly wages). In the fourth column the numeral alongside the 
salesperson s name is his permanent number. Sales are entered “net.” 





































REMUNERATION OF EMPLOYEES 


545 


Flat Quota with Commission on Excess.—The flat quota 
with a commission on the excess is only a modified commission 
plan, the main feature of which is a set standard for every 
employee, with a weekly commission on the excess of the 
standard or quota. This makes it objectionable in depart¬ 
ments doing a seasonal business, as in the rush of business the 
commissions are usually heavy, but in the dull months there 
is no chance for the salesperson to reach the quota, and there¬ 
fore no incentive since the weekly salary is guaranteed. 

In departments where sales are fairly even throughout the 
year, this plan works fairly well. The quota, however, should 
differ in the various departments according to the selling 
expense of the department. The quota increases, as a rule, 
with each dollar of pay. 

Varying Quota and Varying Commissions.—The plan of 
having a varying quota adjusted according to selling costs 
with a varying rate of commission is comparatively new. The 
quotas are based on selling costs in the different departments, 
varying from month to month. This plan provides a uniform 
commission system which can be applied to every department 
in a store and an effort is made to make a fair and accurate 
allowance for all differences in selling conditions as between 
departments and sometimes even within a department. 

In one particular case the selling costs were determined by 
taking a five-year average with special emphasis on the cost 
of the most recent year. The commission for sales beyond 
the quota was fixed at seven-eighths of the given selling per 
cent of the department. This fraction was used because it 
ensured an automatic result. No matter what the selling per 
cent of a department may be, a person at a $16 wage would 
receive a trifle more than $18 provided she sold the amount 
of merchandise set as a quot^ for the $18 girl. 

A standard scale was worked out for every tenth of a per 
cent from 2 to 10 per cent, giving the corresponding commis¬ 
sion rate at any given per cent and the quota applicable for 
each rate of pay at a given per cent. Under this system there 
is, barring mistakes of calculation or changed conditions, an 
incentive for the salesperson to try to go above the quota and 
earn commission. In the good months of the year the quota 


35 


546 


THE MERCHANTS ’ MANUAL 


is higher and the commission rate less. In the poor months 
the quota is lower and the commission rate higher. Therefore, 
in the good months the quota, although greater in most cases 
than the old system, is obtainable by every salesperson, and 
the opportunity is open to make a commission. In the poor 
months the quota, being smaller, still gives the salesperson a 
distinct incentive to try to secure a commission. 

Bonus Systems.—The basic idea of the bonus is an extra 
payment for especially meritorious service. As usually oper¬ 
ated, it is a special reward to the individual, earned by exceed¬ 
ing a set standard of quantity or quality of work. The two 
essential features of such bonuses are: 

1. A true standard, fair to both employer and employee, and 
setting a fully defined goal. 

2. Individual reward adequate to the effort required to 
exceed the standard and paid in proportion to results. 

The aim in all bonus systems is to give a sufficient incentive 
to the best individual effort by offering a substantial reward 
for it. The bonus, as defined by the National Retail Dry 
Goods Association, is a payment, in addition to regular wage, 
for services exceeding a set quota or standard in quantity or 
quality. It may be determined as a percentage of sales above 
quota or by any other method of measurement. It is appli¬ 
cable to either the selling or non-selling force. 

A number of types of payment commonly called bonus in 
store practice are not included in this definition. 

Flat sums or percentages on salary paid at the end of the 
year are not bonus since they are not earned by individual 
effort or paid in proportion to merit. They are gifts or tem¬ 
porary additions to wages. 

Payments on sales in excess of the previous period do not 
establish standards but simply handy comparisons. They 
penalize the conscientious salesman, the most energetic of the 
previous period probably receiving the least. Such payments 
may be made a valuable stimulus but can hardly be called a 
complete bonus system. 

Sales above flat amounts set for a period are not considered 
bonus. There is no standard for judging individual merit. 

The ideals of compensation in a bonus system are as follows: 



REMUNERATION OF EMPLOYEES 


547 


1. To pay all employees fairly. 

2. To secure a fair fixed basis for judging individual efficiency. 

3. To give a sufficient direct incentive to the best work. 

4. To give adequate reward for better work, offering the employee 
the larger compensation which he is capable of earning. 

5. To secure for the enterprise the general benefits of such better 
work. 

An important point in connection with part commission 
pay and bonus is that payments be made weekly, bi-weekly, 
or monthly, instead of at long periods, so that employees 
really are stimulated. 

Bonus for Selling Help.—The type of bonus system com¬ 
monly found in stores first pays a regular salary to the em¬ 
ployee, and then pays additional compensation for sales above 
a fixed amount in each period. Usually the compensation is 
in the form of a percentage of such additional sales. The 
amount which must be sold before the bonus begins and the 
percentage paid above this quota are the two most important 
features for practical determination. 

A wide variety in methods and amounts has been found. 
The most typical system first determines the average selling 
expense for the department, or, in other words, the total salary 
of the salespeople in proportion to total net quantity of sales. 
The quota is then set at the point where the individual em¬ 
ployee exactly earns his salary at the average sales expense 
rate, and sales above this amount receive additional compen¬ 
sation, usually at a percentage rate somewhat less than the 
average sales cost. 

Both the size of quota and percentage paid above quota are 
sometimes varied among the different departments in an effort 
to adjust the amounts to fair average sales expectation in the 
departments. Quota amounts are also frequently varied by 
months or seasons so that fair opportunity is given to earn 
bonus every month. 

The selling bonus is usually a general sales incentive paid 
throughout the store. Where exceptions are made because of 
custom or special conditions, there is ordinarily some form of 
commission basis employed. 

There are wide variations in figuring quotas and rates paid 


548 


THE MERCHANTS’ MANUAL 


above quotas. The most frequent percentages are 5 and 6 
per cent. The most frequent bonus rate has been found to be 
3 per cent. 

In the investigation of bonus systems made by the National 
Retail Dry Goods Association, an average of 71 per cent of 
the salespeople in the stores studied were found to earn the 
bonus payment, averaging 16 per cent of the total compen¬ 
sation. 

The following examples will show briefly how ordinary types 
of bonuses are proportioned: 

1. On sales over quota. As previously mentioned this is by 
far the most common type of bonus. Quotas may be set either 
arbitrarily, from sales in previous periods, on the basis of a 
multiple of the salary, or on the percentage of selling cost. 
Sales above the quota receive additional compensation, usually 
at a percentage rate somewhat less than the average sales cost. 

2. Based on general efficiency. A small Eastern concern 
pays 1 per cent on all sales and in addition an efficiency 
bonus of 10 per cent of the monthly salary for reaching a set 
standard of punctuality, attendance, and efficiency. If the 
bonus is earned three months in succession an additional 
quarterly bonus of 5 per cent is awarded. Three-fourths of 
the help succeed in earning the bonus. 

3. Based on individual sales increase. In some stores bonuses 
are paid on increase in sales over the similar period the year 
before. 

4. Based on departmental increases. The departmental 
bonus is intended to promote teamwork by giving a strong 
incentive to the salespersons who are better at keeping stock 
than making sales or vice versa to do their work efficiently. It 
does away with ill feeling between individuals concerning 
credit for particular sales, etc. 

5. Based on selling expense. Some stores pay bonuses for 
reduction of expenses. In some instances this is combined 
with a bonus on sales over a certain quota. 

Bonus for Non-selling Employees.—There has been little 
scientific application of bonus principles to the non-selling 
departments. There are no definite methods for making the 



REMUNERATION OF EMPLOYEES 


549 


bonus an adequate stimulus to greater individual effort except 
in single departments such as packing, or delivery. 

The non-selling bonus is usually a part of a general store or 
Christmas bonus shared in by all on a basis of salary and 
length of employment. As previously stated, this is not a 
bonus under the standard definition. 

The ordinary form of bonusing non-selling employees is to 
give certain percentage of salary or amount to each employee. 
Sometimes, however, a general amount for the whole store is 
first determined and then shared upon some computation basis. 

Payment to the individual is in most cases determined by 
the size of the salary, but there are also stores which distribute 
bonuses equally to all. In some cases payment is apportioned 
according to general efficiency and in others according to the 
judgment of executives. The amount of the bonus is fre¬ 
quently affected by the length of service of the employee. 

Bonus for Executives and Buyers.—The payment of 
either bonus or commission to store executives is generally a 
matter of individual bargain. Profit or increased sales are 
the most common methods used in determining the bonus. The 
exact amount of the bonus given to the individual is deter¬ 
mined variously in lump sums, percentage above department 
quotas, percentage of profit, percentage of total sales or per¬ 
centage of salary. Where department heads receive a per¬ 
centage on sales the rates run from % to 2 per cent. Where 
the bonus is in the form of percentage of salary, the typical 
percentages are 5 and 10 per cent. 

Executive bonuses differ from those given to employees in 
that the time of payment is generally once a year rather than 
monthly. 

Regular Wage—Commission—Bonus.—Store workers are 
ordinarily paid by one of three methods, a regular wage, a 
commission on total sales, or a bonus plan. In all cases the 
stores are attempting to make the compensation reflect the 
individual efficiency of the employee. Each of these forms 
of compensation has its firm adherents, and no salary plan 
should be adopted without carefully considering the merits of 
each: 


550 


THE MERCHANTS’ MANUAL 


1. The regular wage. A number of stores use the regular 
wage system after studying other plans. A few have returned 
to regular wage as total compensation after trying the other 
forms. The argument is as follows: 

a. The employee feels that all commissions and bonuses are 
more or less uncertain and vastly prefers the same amount in 
a definite, known-in-advance payment. A number of examples 
are usually cited where employees left a store paying bonus 
or commission to go at a lower rate to a store paying flat 
wage, because of this feeling. 

b. The commission or bonus stimulates unhealthy compe¬ 
tition, “stealing of customers,” and gives preference to the 
more forward rather than to the more efficient salespeople. 
Moreover, emphasis is put on immediate quantity rather than 
upon that quality of service which, in the long run, builds up 
the good will element and success of a store. 

c. The advocates of the regular wage method believe that by 
adjusting salaries at frequent intervals on some fair basis of 
efficiency rating, a sufficiently effective and more healthy 
stimulus to the best effort may be secured. 

The difficulty lies in providing a rating system which will 
be both ample and fair. It is always difficult to reduce effi¬ 
ciency to a mechanical or record measure, and judgment of 
immediate superiors all too frequently acquires the tinge of 
favoritism. 

2. Commissions. The advocates of commissions believe that 
the average human requires a direct material interest in his 
work to bring out his best efforts. That 

a. This is most strongly given when the employee receives 
commission and can see the definite return coming to him 
from every sale. 

b. That the effect is spoiled when the compensation is 
remote as only after reaching quota in the bonus system or at 
long intervals of time as in general store bonuses or profit 
sharing. 

c. That overstimulation can be avoided by education, de¬ 
velopment of store spirit, and better organization. 

3. Bonuses. The advocates of the sales bonus believe that 
the system combines the advantageous features of both the 


REMUNERATION OF EMPLOYEES 


551 


wage and commission systems, minimizing their disadvantages, 
as follows: 

a. It guarantees a minimum salary close to the going rates 
of wage in other stores. 

b. It offers special reward in a direct percentage of sales to 
all employees who do better than the department average. 

c. It rewards only special (above past average) merit, thus 
emphasizing the idea of excellence which is essential to stimu¬ 
lation to the best work. 

It is always necessary to consider whether the bonus per¬ 
centage is large enough to constitute a sufficient incentive, or 
whether the length of period results in the employee being stim¬ 
ulated to special effort towards the end of the period when 
it becomes apparent that there is a good opportunity to exceed 
the quota. 

It seems essential that the quota amounts be so placed that 
the average employee can reach them frequently with reason¬ 
able effort. It is also important that the quota be varied 
seasonally, so that there will be a good chance to earn the 
bonus every month in the year, but no month in which the 
bonus will be absolutely certain. 

Profit Sharing.—Some retail establishments have adopted 
profit sharing methods of remuneration for employees. There 
is a great variety of practice, some of the better known forms 
being based on the following: 

1. After all deductions from profits are made, including 
about 10 per cent for capital, the rest is shared by the 
employees in proportion to their salaries. 

2. The net profits are divided equally between capital, 
management, and employees—the employees receiving their 
share in ratio to their salaries. 

3. Arbitrary amount set aside out of profits every six 
months. 

4. Proportion of profits for distribution is definitely deter¬ 
mined in advance. 

5. Method of determining individual shares is known, at 
least in a general way, to the participating employees. 


CHAPTER XXXVI 


SERVICE TO EMPLOYEES 

The relations of the store with its employees have become 
of increasing importance in recent years. The reason prompt¬ 
ing increased interest in the welfare of employees is not based 
on charity. It is based on the sound belief that stores adopt¬ 
ing schemes for the welfare of their employees are more suc¬ 
cessful. While it is difficult to estimate the worth of certain 
intangible projects, costs do not appear to be out of proportion 
to the returns, because the employees are more loyal, the store 
is a better store, and the earning power is increased because 
of the increased good will and efficiency of the working force. 

There is, however, another side to relations with employees. 
The personnel must be made an effective working unit. 

In all retail establishments some form of discipline is neces¬ 
sary at times. The modern tendency is to use severe methods 
only as a last resort. As soon as a store realizes that discharge 
is one of the most expensive methods which can be used, dis¬ 
cipline takes the form of pointing out to the employee wherein 
he or she is deficient. 

It is always a wise plan to discuss matters with the em¬ 
ployee in privacy and never in the hearing of other employees. 
The employment manager or store superintendent is usually 
the final court of appeal. Discipline of this nature will be 
reduced to a minimum by the most careful selection of the 
employees themselves and a wise code of rules. 

In some stores matters of discipline are in the hands of a 
committee chosen by the employees themselves. 

Tardiness and Absenteeism.—Lateness and absenteeism 
are serious problems. While the insistence of the store 
on prompt attendance is always necessary, the means of 
enforcing it differ widely. There has been a definite trend in 
the past few years to do away with penalization of tardiness 
and absence in most of the larger stores of the country, and 

552 




SERVICE TO EMPLOYEES 


553 


especially in New York City. This is due in great part to a 
better understanding of personnel problems. 

Prompt attendance is a proposition which must be sold 
direct to the employees by an important executive of the firm. 
At one time Gimbel Brothers had an astounding number of 
employees reporting late every morning, and even though they 
fined them for lateness, it had no appreciable effect until the 
head of the firm took it into his own hands and in various 
group meetings brought up the subject of promptness, and 
started setting an example by coming to the store at 8 instead 
of 9:30 or 10 as formerly. He also had the other members of 
the firm on duty at the store at a considerably earlier period, 
usually between 8 and 8:30. There was an immediate drop 
in tardiness. 

It can safely be stated as a fact that in those stores where 
tardiness on the part of executives is kept at a minimum the 
record of tardiness on the part of non-executives is corre¬ 
spondingly low. 

Reports of tardiness and absences to those in authority en¬ 
courage regularity, for employees are hesitant about taking 
any chance in coming late or remaining away for a day when 
they know every lateness or absence is brought to the notice 
of the Director of Personnel or the Store Manager, and put 
down on the rating card. 

Following up all absentees by calling at the home of the 
worker is a remarkable aid in eliminating unnecessary ab¬ 
sences. Some firms require all persons absent without notice 
to present a statement from the physician to the effect that 
they were ill, or other satisfactory explanation, before per¬ 
mitting them to return to work. 

One method of promoting regularity and attendance is the 
paying of bonuses, awarding of prizes, or granting vacations 
with pay to employees who are neither tardy nor inexcusably 
absent during a stipulated period. 

While in the past it has been a "common method” to make 
rewards for regularity and attendance, today most stores do 
not subscribe to such methods. Rather is it the practice to 
give consideration to an employee’s record in the matter of 
promotion or increases in salaries. A great many firms prefer 


554 


THE MERCHANTS’ MANUAL 


this method of reward to that of an extra incentive to do the 
work, at least as regards punctual attendance, which the em¬ 
ployee agrees to upon being engaged. 

The addition of a medical department to a store has been 
found to bring immediate reduction of time lost on account of 
illness. This was forcibly brought out at the Jordan Marsh 
Company’s store when their absenteeism on account of ill 
health was cut down 75 per cent within nine months after the 
installation of a medical department. By nipping cases in the 
bud, sending the worker home for the rest of the day, the 
medical department prevents the development of sickness 
which might cause several weeks of absence. Likewise the 
prompt and proper treatment of injuries prevents the develop¬ 
ment of infection which might cause absence. 

The ordinary method of dealing with a tardy employee is 
to issue late passes from the superintendent’s office before em¬ 
ployee is admitted to the locker room. These passes are 
handled in any one of the following ways: 

1. A late slip made out by superintendent. 

2. A late slip made out by employee and signed by floor- 
man, who sends it to the superintendent’s office. 

3. Individual permanent record card which employee gets 
in superintendent’s office and presents at locker room, where 
it is signed and returned to the superintendent’s office. 

Another ordinary method is to close the time clock at a 
certain hour, and before a late employee can register he must 
secure his card at the superintendent’s office. In one store it 
has proved successful to have the tardy employee submit card 
to the superintendent after store closing hours, the adjustment 
being made on the employee’s time. 

Payment of Wages During Illness.—Policies differ re¬ 
garding payment of wages to employees whose absence from 
the store is caused by illness. The length of time for which 
payment is made is sometimes arbitrarily set by the store and 
in other cases determined by individual circumstances. 

Most stores give greatest consideration to length of ser¬ 
vice, combined in a large measure with the quality of ser¬ 
vice rendered by the employee, in deciding how he shall be 
cared for when ill. Each case is decided on its own merits. 



SERVICE TO EMPLOYEES 


555 


In the cases of deaths in the family a number of firms have 
arbitrarily decided on payment either in full or in part for 
three days. 

Where mutual benefit associations have been formed, ab¬ 
sentees because of illness are compensated out of the funds of 
the association. In some cases the firm contributes an amount 
proportionate to that supplied by the association. 

In the case of absences caused by death in the family or 
other circumstances, the case is judged according to its indi¬ 
vidual merits. 

Vacations.—Sharp difference of opinion seems to exist 
among stores as to just how vacations should be determined, 
and the length of time which should be allowed. In an inves¬ 
tigation of 875 stores made by the National Retail Dry Goods 
Association, it was found that 12 per cent did not allow vaca¬ 
tions, and these were principally stores doing a business of less 
than one million dollars annually. Fifty per cent of the stores 
allowed one week with pay, and 38 per cent allowed two weeks 
with pay. The length of service generally determined the 
vacation policy. Thirty-one per cent of the group required 
employees to be in their employ at least six months before 
earning a vacation, while 60 per cent required one year of 
service before any vacation would be allowed. 

One of the most interesting vacation schedules recorded is 
that of the J. L. Hudson Company of Detroit. It reads as 
follows: 

1. Any person who has been in our employ previous to February 1 
of any year shall receive one week’s vacation with pay. 

2. Any person who has been in our employ previous to September 1 
of the previous year shall receive two weeks’ vacation with pay. 

3. Any person who has been in our employ for five succeeding years 
previous to June 1 of any year, shall receive three weeks’ vacation with 
pay, and shall have the privilege of taking one of the three weeks during 
the winter season at a time to be arranged with their immediate 
superior, should they so desire. 

4. Any person who has been in our employ for ten succeeding years 
previous to June 1 of any year shall receive four weeks’ vacation 
with pay, and shall also have the privilege of taking two weeks of the 
four weeks’ vacation in the winter season, at a time to be arranged with 
their immediate superior, should they so desire. 

5. Any person who has been in our employ for fifteen succeeding 


556 


THE MERCHANTS' MANUAL 


years previous to June 1 of any year shall be entitled to the same vaca¬ 
tion period as set forth in paragraph four and shall be entitled to a 
summer vacation bonus of $50 in addition. 

5. Any person who has been in our employ for twenty succeeding 
years previous to June 1 of any year shall be entitled to the same vaca¬ 
tion period set forth in paragraph four, and shall be entitled to a 
summer vacation bonus of $100 in addition. 

Night and Summer Closing Hours.—The majority of 

dry goods and department stores close Saturday at 5, 5:30, 
or 6 p. m. This action was due to the influence of retail 
trade associations throughout the country. 

Monday closing during the summer months was started 
several years ago by the Printemps in Paris and was found to 
be more feasible there than Saturday afternoon, when a large 
volume of business is transacted. The same situation prevails 
in this country, but other days during the week have been 
selected as half holidays during the warm weather. The 
week-end habit is spreading throughout the country, however, 
and there is a possibility of more cities taking up Monday 
closing in preference to Wednesday or Thursday. Wednesday 
appears to be the most popular selection in the majority of 
cities. 

Shopping Hours for Personnel.—The hours in which em¬ 
ployees are allowed to do their shopping differ in various 
stores. The store should be guided in its selection of hours by 
the periods during which the peak of outside business seems 
to be the lowest so that employees may not conflict in making 
their purchases with regular customers. It seems generally 
agreed that the earlier hours of the morning, immediately 
after opening, seem to be the most feasible hours for shopping 
by the personnel. 

Practically all stores require employees when shopping to 
have a shopping pass issued by the department head or section 
manager. In every case it is necessary for employees to re¬ 
turn this shopping pass to the person by whom it was issued. 
By placing the time when the pass was issued and when 
returned upon the form, it is possible to prevent any abuse on 
the part of the employee in staying away from the department 
for a considerable length of time. When employees are 
allowed to shop during luncheon periods, this pass helps to 


SERVICE TO EMPLOYEES 


557 


identify them if they are dressed in street apparel, but it 
should also be necessary for them to be identified by some one 
in the store who knows them. 

The practice of selling merchandise to employees at cost or 
at cost plus a certain discount exists only among the smaller 
stores. The most popular practice seems to be to sell mer¬ 
chandise to employees at 10 per cent less than the regular 
retail price. 

Employees are usually required to take packages with them 
unless they are unusually heavy or bulky. Merchandise pur¬ 
chased in the store is commonly held at the time desk until 
claimed by the employee in the evening. 

The general feeling among the more progressive stores of the 
country is that the employees should be allowed to purchase 
at the lowest possible price all such merchandise as is neces¬ 
sary for their immediate needs. It is never a good advertise¬ 
ment for a store when the employees either will not or cannot 
purchase the goods which it sells. It is an established fact 
that the merchant must sell his salespeople before he can sell 
to his customers. 

Figure 109 shows forms used to regulate shopping by em¬ 
ployees used by Lord and Taylor, of New York. 

WELFARE OF EMPLOYEES 

The activities which come under the head of welfare work 
are so numerous and so important that in many large stores a 
separate department is established with an experienced per¬ 
son, usually a woman, in charge. In stores where there is no 
social service director, such work is done under the supervision 
of the manager, the superintendent, or the educational depart¬ 
ment. In some stores it is divided among various officials. 
In smaller stores, an educational director can supervise and 
direct all social service activities. 

Health. —The first and most important division of social 
service work is health. In every store a room should be set 
apart for the administering of simple first aid, and a qualified 
person, a trained nurse, if possible, should be available to help 
care for the sick and injured. Most stores of larger size em¬ 
ploy at least two trained nurses, one for the work in the store 


558 


THE MERCHANTS ’ MANUAL 


L T 844 

Stria N9 1.348 * N2 9 

Issued to No. Date 


EMPLOYES’ 

SHOPPING PASS 


Issued to 


Number 


Employed 3 Months 


This pass expires 


Sales No. 

Check 

Amount 

SECTION MANAGER'S 

O. K. FOR DISCOUNT 
































Issued by- 


Dale- 


Series N2 1348 Sip N2 9 


LT 516 

DISCOUNT PERMIT 

To be used when the bearer is a dependent of a Lord & Taylor employee 
1 hereby certify that 1 am partially dependent 

an employee of Lord & Taylor lor my support. 

Signature . 

Address .-. 


Approved 


Employment Office 


Good only for . (date.) 

NOTE.—When Ihe merchiindise purchased is lor the use ol a dependent other than 
the person to whom the permit is issued. Employment Office will so note on permit. 


Fig. 109.—Form used to regulate shopping by employees 










































SERVICE TO EMPLOYEES 


559 


and one for visiting sick employees in their homes. A doctor 
holding office hours daily may be consulted free of charge. 
It is important that these store doctors and nurses be of good 
professional standing. A second-rate person whose services 
may be obtained cheaply is poor economy. 

Some of the functions of a typical health department are: 

1. Initial physical examination. 

2. First aid. 

3. Daily clinic. 

4. Inspection of working conditions. 

5. Follow-up of health of each individual employee. 

6. Home visiting. 

7. Cooperation in the investigation of absentees. 

8. Hygiene lectures. 

9. Nutrition. 

Preventive work in medicine is receiving more and more 
emphasis. It is considered quite as important to keep the 
well workers in good health as to treat those who are sick. 
With this end in view, the health department pays particular 
attention to working conditions: 

1. Ventilation, lighting, and cleanliness of the entire store. 

2. Equipment used by workers, with special reference to the 
hygienic features of chairs, desks, and tables used by seden¬ 
tary workers. Equipment should be adjusted to the indi¬ 
vidual worker. 

3. Type and care of lavatories. 

4. Type and care of lockers and locker rooms. 

The Harvard Plan.—The Harvard Medical School, in co¬ 
operation with twenty-five contributing stores, has undertaken 
much important work in reference to the health of mercantile 
workers. The following extracts from a recent announcement 
show the purpose back of the movement: 

1. The Plan:—Under a cooperative arrangement between Harvard 
University and certain merchants it is proposed to seek the facts con¬ 
cerning preventable illness among store employees, 

2. The reason for the work: 

Few stores have any conception of the amount of actual 

sickness, of lost time, and inefficiency ascribable to poor 

physical condition in their working force. 

An estimate from one large establishment ascribes 40 per 


560 


THE MERCHANTS’ MANUAL 


cent of the annual labor turnover to illness from preventable 
causes. 

Manufacturers have recognized the fact that good health 
pays both directly, in promoting a better working spirit 
throughout the entire organization. 

Store executives, personnel directors and salespeople recog¬ 
nize that the same situation is presented by their establish¬ 
ments and it is to contribute exact information in regard to 
the problem of preventable disease that the present studies 
have been undertaken. 

3. Results:—Similar work in manufacturing plants has yielded satis¬ 
factory results and is now well established on a firm footing. 

It is hoped by an academic study of store conditions and store people 
to learn where the application of widespread systematic hygienic 
methods and health education may greatly aid the workers to reach 
more nearly their full working capacity with less physical and nervous 
wear and tear, and with more pleasure in their work. 

Dr. Arthur B. Emmons, 2nd, director of the Harvard Mer¬ 
cantile Health Work, says the first step is to provide a daily 
record sheet, one line for each patient, with ruled columns 
spaced as follows: 

Four narrow columns to be checked, marked “Dept.,” 
“Male or Female,” “Employee,” “Customer.” 

Then comes a broad space 2 inches in width for name, then 
three check columns, marked “Medical,” “Surgical,” “Indus¬ 
trial Accident.” 

In another broad column the nurse writes “Complaint.” 
Then a column for “Treatment.” Then the broadest space for 
“Disposition and Remarks.” Finally nine check columns 
marked “To Work,” “Rest Room,” “Home,” “Seen by M. D.,” 
“Seen by Nurse,” “Advice Only,” “Recalls,” “Floor Calls,” 
“Transportation.” 

By adding these columns, a daily health report is obtained 
from which a monthly report such as the following may be 


compiled: 

HEALTH SERVICE DEPARTMENT 
Name of Store 

Report for the Month of January, 1921 

Working days. 25 

Average number of employees. 1,400 

Total new cases. 803 

Per cent of average number employees treated.. 57.4 








SERVICE TO EMPLOYEES 561 

Number of revisits. 140 

Total visits. 943 

Seen by store physician. 154 

Medical Cases 

Relief given by nurse. 761 

Referred to family physician. 15 

Referred to specialists. 9 

Used Silence Room. 61 

Advice only by nurse on personal health. 182 

Advice by nurse on family problems. 17 

Dental cases treated in store. 24 

Referred to private dentist. 8 

Referred to Harvard Dental School. 7 

Referred to agencies. 21 

Surgical Cases 

First-aid treatments. 142 

Surgical dressings subsequent to first aid. 84 

Number of accidents reported to Insurance Co. 13 
Floor calls for accidents. 2 

Home Visits 

Number of home visits made. 21 

Absences due to personal illness. 7 

Absences due to family illness. 3 

Referred for nurse’s care to Vis’g Nurses’ Ass’n 0 

Not at home. 6 

Wrong address. 4 

Letters sent to absentees. 4 

Hospital visits. 0 

Customers 

Customers’ accidents reported to Insurance Co. 2 

Customers’ minor ailments. 4 

Customers’ use of Silence Room. 6 

It should be borne in mind, however, that there is danger 
in attempting to keep too careful records of cases. 

From a doctor’s standpoint, detailed records are deemed, 
essential, but no clinic will ever be 100 per cent efficient unless 
it handles 100 per cent of the store’s sickness, and those cases 
of the more serious nature will seldom, if ever, be brought to 
a clinic if the employee has the slightest impression that a 
record is to be made. This is the actual experience of many 
large establishments. 

36 



























562 


THE MERCHANTS’ MANUAL 


Dental and Chiropody.—Most organizations recognize the 
great importance of dental work. It has been estimated that 
two-thirds of the applicants in the majority of stores need 
dental work done in some form or other. 

The dentist is usually in attendance at some time during 
every day. He is provided with space and equipment and 
paid a certain amount. Some stores provide this service free 
to employees, while others charge a nominal amount. 

Since salespeople must be on their feet such a large pro¬ 
portion of the time, a chiropodist in the store is a valuable 
adjunct. One store finds that a salesperson who has trouble 
with her feet is likely to become irritable, which fact is in¬ 
stantly reflected in her sales of merchandise. 

Group Insurance.—Group life insurance is a plan of insur¬ 
ance whereby an employer may furnish protection to all the 
employees of an organization under one blanket contract. 

It is issued on groups of from fifteen to several thousand 
employees of a common employer, under a blanket contract 
that affords protection to each employee individually so long 
as he remains in the service of the firm or as long thereafter 
as the stipulation calls for. Provisions in some contracts give 
the employee the right to convert the policy individually if 
application is made to the company within 30 days after 
termination of his insurance under the group plan. Certain 
hazardous risks, such as window cleaners, dynamo operators, 
chauffeurs, etc., are not included under group contracts. 

Some policies provide for indemnities for total and perma¬ 
nent disability in consideration of a small additional carrying 
cost. Contracts for group insurance are generally issued with¬ 
out medical examination. All premiums, in most - cases, are 
paid by the employer. 

Group insurance is maintained mainly to make the job more 
attractive to the employee. It aims to promote loyalty and a 
higher degree of initiative from the employee. It does not, 
however, operate satisfactorily if intended for a substitution 
for wage increases, bonus, commission, workmen’s compensa¬ 
tion benefits, employee’s welfare associations, good working 
conditions, or for other humane and appreciated benefits that 
might be part of the store’s work-a-day program, 


SERVICE TO EMPLOYEES 


563 


There are three general plans of group insurance, many 
modifications of which have been made to meet the particular 
requirements of employers: 

1. Policies that provide the same amount of coverage for 
each employee (excepting executives and department heads) 
regardless of w r age or length of service. 

2 . Policies that provide insurance in amounts equal to an 
employee’s yearly wage with a limit for any individual, 
usually fixed at about $3,000. 

3. Policies that provide an amount increasing with length 
of service. This plan has proved to be the most popular as 
it gives increasing insurance as a reward for continued and 
faithful service. 

The effectiveness of group insurance in retail stores, as has 
been shown by results in different organizations, has depended 
to a great extent upon the manner of its introduction and in¬ 
stallation. It must be sold to the employee as well as to the 
employer. Group insurance is unwisely installed when it is 
merely adopted hastily and insurance certificates issued to 
employees without explanation. They may have but little 
idea of what they are receiving and will not be impressed with 
its value. One plan is to place a series of explanatory leaflets 
in the pay envelopes, then hold group meetings, and describe 
the plan in detail. 

Group insurance is based upon the yearly renewable term 
policy, with premiums payable monthly, quarterly, semi¬ 
annually, or annually. The rates depend upon the attained 
age of each individual and increase annually, although experi¬ 
ence has shown that the group premium, which is the total of 
the combined individual rates, will not advance for some years 
but will remain practically stationary. The reason for this is 
that the older employees who die and discontinue will be re¬ 
placed by younger lives on which the rate is less and on whom 
a smaller amount of insurance is carried. 

Before the coming of group insurance, many retail stores, 
singly and in groups, struggled under the plan of providing 
insurance protection themselves for the employees. In most 
cases results were unsatisfactory, and on account of compli¬ 
cated actuarial methods and technical computations, the 


564 


THE MERCHANTS’ MANUAL 


stores were often embarrassed by the diversion of earnings 
for a safe reserve upon which to operate. There are, perhaps, 
a few large stores that could successfully carry their own 
insurance by utilizing a large sinking fund. A catastrophe, 
however, or an epidemic might cause an unexpectedly large 
number of deaths that would wipe out the resources of any 
but the strongest institution. 

Mutual Benefit Associations.—In many stores an organ¬ 
ization of employees usually known as the mutual aid or 
mutual benefit association exists for the purpose of giving 
financial aid to members in case of illness or death. An ex¬ 
amination of the by-laws of these associations reveals great 
similarity in plan and policy. 

Membership is ordinarily compulsory with monthly dues 
assessed accordingly to the amount of salary received. The 
store itself may or may not contribute a part of the funds 
paid in case of illness or disability of the employee. 

Mutual benefit associations are often valuable adjuncts to 
group life insurance. The employer gives the group insurance 
outright to all employees in the service and, therefore, where 
there is a mutual benefit society, it is relieved of the burden 
of paying death benefits. This leaves more funds to the em¬ 
ployee’s associations for the payment of disability benefits 
due to sickness and accidents. 

Such mutual benefit associations, when obtaining the active 
interest of the employees, form a combination with group life 
insurance which may prove of value to the merchant in further 
relieving distress and in keeping down needless absences by 
having the employees interested financially in keeping losses 
in their own organization at a minimum. 

Pensions.—It is a fairly well accepted fact today that in¬ 
dustrial pensioning is an acknowledgment of the debt which 
industry owes to the worker for his service during the pro¬ 
ductive portion of his life. Regardless of the underlying ten¬ 
dency involved, it is. certain that more and more large organ¬ 
izations are adopting pension systems as a part of the work 
of the mutual benefit associations. 

Recently the Shepard Stores of Boston formulated a pension 
plan for the benefit of their employees. This provides for the 


SERVICE TO EMPLOYEES 


565 


retirement of employees who have been in the service of the 
store for ten years or more and have reached the age of sixty 
years for women and seventy for men: 

Pensioners are classified in two divisions: those whose 
average wage during the last ten years of service was $20 a 
week or less, and those whose average wage during the last 
ten years of service was more than $20 a week. 

The amount of pension for the employees in the first class 
is 3 per cent of the average wage times the number of 
years of service; for those in the second class the amount of 
pension shall be 2 per cent of the average wage times the 
number of years of service. 

The John Wanamaker stores pension all employees on re¬ 
tirement at seventy years, or upon disability after twenty 
years’ service, receiving one-half of their salary at the time 
of retirement, with a minimum of $8 per week, and a maxi¬ 
mum of $100 per week. 

Many of the smaller department stores have been pension¬ 
ing their old employees, although they have not drawn up any 
specific plans, giving each case individual consideration when¬ 
ever it is felt necessary to pension an old employee. 

In general, a pension helps to bridge the gap between super¬ 
annuation and death. Although any type of old-age pension 
is good, the kind which leans least towards a charity on the 
part of the company is best. The income from an investment 
to which the workman has contributed and which the com¬ 
pany has helped him to accumulate is not charity, and has the 
further merit of leaving an inheritance to the family. 

Employee’s Savings and Loan Associations.—A number 
of interesting employees’ saving and loan associations have 
been in operation for several years and have met with con¬ 
siderable success. The Credit Union of the Gilchrist Com¬ 
pany, Boston, has a twofold purpose: 

1 . To help those in moderate circumstances to save. 

2. To assist persons who have no bank credit and who are 
in need of financial help to secure small loans at a reasonable 
rate of interest. 

The credit union is an association chartered by the State of 
Massachusetts under the control of the state bank commis- 


566 


THE MERCHANTS' MANUAL 


sioner, with subsidiary unions in about ninety establishments 
throughout the state. The formation of like credit unions has 
also been started in eight states. 

Cooperative Associations.—In an increasing number of 
stores the mutual aid association is merely a department of a 
larger organization most frequently known as a cooperative 
association which includes in its membership the entire per¬ 
sonnel of the store. The purpose of such an association in 
one store is “to increase efficiency, to add to social oppor¬ 
tunities, and to create and sustain a just and equitable relation 
between employer and employee.” The association in another 
store states as its aim “to promote and maintain justice and a 
spirit of willing cooperation between the firm and its em¬ 
ployees.” 

Cooperative associations are self-governing bodies having 
their own officers and controlling a wide range of activities 
which, in other stores, either do not exist at all, or are man¬ 
aged with varying degrees of success by the store executives 
or special officials. These activities include all forms of social 
diversion, clubs and classes held out of store hours, athletic 
leagues, lectures, musical and dramatic organizations, etc. 

A cooperative association which reaches a high stage of 
development may have full control of the employees’ lunch 
room, library, and health department; may be entirely re¬ 
sponsible for the publication of the store paper; may install 
and manage a cooperative grocery store; and may, by virtue 
of powers delegated by the store management, determine to a 
very great extent the rules and policies which govern their 
own employment. This is actually being accomplished in 
some stores. 

Although such policy may seem an extreme development of 
industrial democracy, yet the demand of labor for self- 
expression and self-determination seems to point to some such 
program in the future. That the initiative and leadership 
developed by democratic organizations of employees reacts to 
the benefit of the business is the testimony of firms who have 
tried out this experiment fully. The employees work with a 
sense of equality, justice, and freedom, which creates a spirit 
of true cooperation. 


SERVICE TO EMPLOYEES 


567 


Employees’ Lunch Rooms.—An orderly, attractive, clean, 
light, well-ventilated lunch room, in which employees may 
lunch in comfort and with pleasure, is one of the definite 
obligations of a merchant to his store family. Few store lunch 
rooms are of a standard which the manager would consider 
satisfactory for himself and, in planning improvements, it is 
sometimes helpful to study the existing situation from this 
personal standpoint. 

The Lord and Taylor employees’ cafeteria on the roof of 
their store is in charge of a professional dietitian. The em¬ 
ployees pay for their lunch on an a la carte system. To a 
great extent this nullifies the advantage of the trained dieti¬ 
tian, since it has been found by experience that very few 
employees will choose of their own accord a properly balanced 
meal. 

Most stores serve food either at cost or at a slight loss. The 
lunch room of the L. S. Ayres Company of Indianapolis is 
operated under the control of the employees and has not only 
been self-supporting but has paid a fair rate of return on the 
capital invested. A properly managed lunch room should be 
maintained with the purpose of serving food as near cost as 
possible, endeavoring constantly, however, to reduce the cost 
but never the quality. 

Managements should realize that to a large extent the best 
meal of the day is procured by the employees at the noon 
hour, and too much care and thought cannot be put into the 
selection as to quality of foodstuffs served. 

Recreation Rooms, Libraries, Etc.—A recreation room 
with a piano should be located, if possible, near the lunch 
room. Under recreation rooms might be mentioned the phono¬ 
graph. It is, in many instances, more desirable than the piano. 
A like popularity for the radio might be predicted. There 
should be another room, provided with books and magazines, 
for those who wish to spend the lunch hour quietly. The 
Jordan Marsh Company has set aside an entire floor for em¬ 
ployees, which contains an auditorium, the women’s rest room, 
the women’s silence room, the library, the men’s rest room, the 
men’s smoking room, the boys’ room, the cafeteria and the 
restaurant. 


568 


THE MERCHANTS' MANUAL 


Libraries range in size from the circulating library main¬ 
tained by Marshall Field and Company which gives out six 
to seven thousand volumes monthly, to small book racks for 
occasional reading. 

In the summer a roof garden with awnings, flower boxes 
and comfortable benches is a source of much enjoyment. 

Voluntary clubs and classes of many kinds meeting after 
hours are arranged by welfare departments of some stores. 
Suppers and entertainments bring people together in a friendly 
way and make for store spirit. 

The Store Paper.—Under proper management, a store 
paper is a unifying factor of great value. As it is difficult for 
anyone employed in another capacity to give the necessary 
time to editing a paper, it is usually advisable to hire someone 
specially fitted to do this work. Such a person is frequently 
considered a member of the advertising department or of the 
welfare department and assists with the other work of either 
of these divisions. The development of the store paper, how¬ 
ever, has been so marked that expert knowledge of store paper 
technique is highly desirable. 

In some stores the paper is furnished free to all employees, 
while the management of others, believing that people value 
an object more if they pay for it, charge a nominal sum. A 
charge of five or ten cents is not too high for a monthly pub¬ 
lication, while one or two cents will suffice for weeklies. 

The conduct of the paper should be left in the hands of the 
employees as far as possible, with only slight supervision. 
The employees should be made to feel that it is their publica¬ 
tion, and that their personal interest in it is their sole incen¬ 
tive for purchasing it. 

The way in which the store paper copy is handled will have 
a great deal to do with successful results. There was once a 
time when copy of an inspirational nature emanating from the 
management was greatly in predominance. This policy has 
been succeeded by one laying emphasis of store news, well 
illustrated. As one authority says: 

If such journals, which are first, foremost and last for home con¬ 
sumption, fail to give their readers the impression that they are 
alive to, and keeping up with, and even a little ahead of the course 


SERVICE TO EMPLOYEES 


569 


of store events, that touch them intimately, they sooner or later 
earn from their public only a contemptuous toleration. If, on the 
other hand, they can supply the news that interests their people, 
while it is hot, they make themselves a real factor in their lives. 

The ordinary method of gathering news is to appoint a 
reportorial force among the employees, one member being 
designated for each department or floor, or office. Ideas can 
frequently be obtained by a careful study of other store 
papers. Announcements by the management naturally find 
wide publicity through this medium. 





SECTION VII 


SPECIAL SERVICE 




CHAPTER XXXVII 


SERVICE TO CUSTOMERS 

There was once a time in the history of retailing when 
almost the sole attraction held out by the various merchants 
was “something different” in merchandise for sale. Competi¬ 
tion and careful comparison shopping eventually reduced this 
argument to a question of which store had the better pub¬ 
licity, since there was little to choose between merchandise 
sold at the same price levels. Stores then turned to service 
as a means of attracting customers, having finally realized 
that customers will go where conditions are most pleasant, 
where time and energy may be saved, where salespeople are 
courteous, etc. 

Services may be roughly divided into services which actually 
assist the customer and those which are used solely as a 
means of attracting people to the store. The importance of 
the former is not questioned; the use of the latter must be 
decided by store policy. 

Store service as we know it today is the result of several 
factors working conjointly: 

1. An adaptation to the needs and wishes of the buying 
public, as evidenced by the services offered by other stores. 

2. An endeavor to create an institutional idea in the mind 
of the public as an incentive to purchase merchandise at a 
particular store. 

3. A recognition of the sound principle of retailing that 
speed, accuracy, courtesy, convenience, comfort, etc., make it 
easier to sell the customer. 

4. An attempt to humanize the relations of store and cus¬ 
tomer, and to approximate, in so far as possible, the intimate 
relations existing in small stores and specialty shops. 

If a customer likes to shop in a particular store, it means 
that the service idea behind that store is laid on sound founda- 


573 


574 


THE MERCHANTS y MANUAL 


tions. Material factors, important as they prove to be in 
many cases, are only assistants in the service idea. The main 
factor is the individual and combined cooperation of the 
personnel. 

The ultimate arbiter of what services shall be rendered is 
the public. If it desires to pay for service, and in many cases, 
such as deliveries and credits, such desires have been unmis¬ 
takably evidenced, the trend towards giving more service will 
increase. But the cost of merchandise sold must inevitably 
increase as well. 

It seems well established that there is a class of customer 
which is willing to pay for maximum convenience. There is 
also a class of customer which prefers to omit the services 
and pocket the difference in cost. It is difficult for a store 
to serve both clienteles. 

Proper Direction of Customers.—Directing customers 
correctly and expeditiously is a service which is definitely 
reflected in sales made by the store. Location of goods for 
sale is made public in various ways: 

1 . The store directory. By placing the store directory near 
the elevators, at main entrances, and other prominent places, 
customers who dislike asking questions can find out for them¬ 
selves. It is customary to arrange departments alphabetically 
on the directory, although some stores arrange departments 
according to the floor. Still other stores group various lines 
together on the directory. The important thing is to have 
the directory intelligible and serviceable. 

2 . Salespeople, floor superintendents, etc. Ordinarily all 
salespeople are supposed to be responsible for knowledge of 
position of regular departments. It is impossible in a large 
store to keep track of special sales and temporary shifts to 
bargain tables. Consequently, many stores make it part of 
their policy to send proofs of advertisements to each depart¬ 
ment, so that knowledge of merchandise may be kept up to 
date. Salespeople, in addition to matters involving the lo¬ 
cation of merchandise, frequently have to answer a great 
many general questions. Even though the answer cannot be 
supplied, it is important to impress upon the salesperson the 
necessity of courteous attention. 


SERVICE TO CUSTOMERS 


575 


3. Signs, arrows, etc. Guide signs are frequently service¬ 
able in guiding customers to out-of-the-way places. Placing 
aisle numbers and names of departments on pillars or walls is 
frequently valuable. 

4. Advertisements. It is customary to give location of mer¬ 
chandise in the advertisements themselves. This is particu¬ 
larly important when the merchandise has been shifted from 
its regular position. 

5. Elevator operators. All elevator operators must be able 
to give information concerning location of merchandise. 

6 . The information desk. All stores have, or should have, 
an information desk with directories, timetables, maps, amuse¬ 
ment schedules, etc. One store has made a point of placing 
several young women at different places on the main floor, 
identified by being dressed all in white and wearing a badge 
marked “information.” 

Some stores furnish salespeople with a store directory, listed 
by articles, which fits inside the salesbook. 

Samples.—The giving of samples in many cases is the 
source of a great amount of wastage in piece-goods depart¬ 
ments. Most stores usually handle this matter by cutting a 
strip of cloth about two inches wide and inserting this strip 
between the last fold of the cloth and the board on which it 
is wound, leaving a small end of this sample visible so that 
the salesman may easily find it and cut off a sample when 
requested to do so by the customer. 

In some stores the salesman also places an ordinary pin 
ticket on the sample and places on this ticket the price of 
the merchandise per yard. This is the simplest way of 
handling the problem. 

Another method, which may be satisfactory in certain or¬ 
ganizations, is the cutting of a strip similar to that above 
described, and making it into samples, of sufficient length 
and width. These pieces can be inserted in a strong envelope 
with a piece of the cloth pasted on the outside, also the retail 
price, and any additional information which may be desired. 
These envelopes, if carefully kept in a convenient place under¬ 
neath the counter, can be readily accessible to the salesman. 
This system works well where the piece-goods department is 


576 


THE MERCHANTS’ MANUAL 


not so large as to make it unduly cumbersome. Salespeople 
should be required to cut samples as small as consistent with 
the character of the goods. Most samples are at least twice 
as large as necessary. 

It is always necessary to guard against the shopper who 
obtains samples from all stores merely for the sake of com¬ 
parison. Some stores maintain a rigid policy of giving no 
samples at all. Others discourage the practice as much as 
possible. In general, sample giving is regarded as a necessary 
evil. 

Samples have been made of paper in some cases for con¬ 
sumer distribution, and are frequently used by manufacturers 
for distribution to jobbers and dealers. It is possible paper 
samples may find greater favor in the future. 

C.O.D. Sales.—The C.O.D. sale is generally regarded as 
a service to the customer. In most stores the practice is not 
encouraged. To formulate a plan or system of handling 
C.O.D.’s which would be uniform and applicable to every 
department store seems to be impossible on account of differ¬ 
ent prevailing conditions. There are certain features of all 
systems, however, which can be universally applied. A large 
store will usually require a C.O.D. register clerk and a 
C.O.D. cashier, while in a small store these two functions 
can be combined and handled by one person along with other 
work. 

All C.O.D. sales should be registered as soon as they are 
made by a clerk who is under the supervision of the accounting 
department. This registration may be made over the carrier 
or telephone system. The registration clerk records the sale 
in a duplicate C.O.D. register (see Fig. 110), noting therein 
the name of the C.O.D. customer, the amount of sale, and 
the method of delivery. The original and duplicate of the 
salescheck is then stamped with a consecutive C.O.D. num¬ 
ber, by which the transaction may be followed through all 
subsequent steps of delivery. 

The duplicate of the C.O.D. sales check is returned to 
the inspector or bundle wrapper as soon as given the consecu¬ 
tive number. The duplicate is then pasted on the C.O.D. 


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SERVICE TO CUSTOMERS 


577 


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Fig. 110.—C.O.D. register. 























































































578 


THE MERCHANTS' MANUAL 



delivery tag, Fig. Ill, which must be attached to the package 
before it goes to the delivery department. 

In the delivery department the C.O.D. trip sheet, see Fig. 
112, gives information as to salesperson’s numbei, name and 


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Fig. 111.—Specimen of C.O.D. tag. 


address of customer, C.O.D. number, amount, settlement 
signature, merchandise returned, and disposition. Trip sheets 
are made in duplicate, one copy being kept by the delivery 
department while deliveries are being made. 










































SERVICE TO CUSTOMERS 


579 



Fig. 112.—C.O.D. trip sheet. 





































580 


THE MERCHANTS’ MANUAL 


From the trip sheets the C.O.D. cashier is enabled to check 
up all of the C.O.D. sales with the entries on the C.O.D. 
register. 

Figure 113 shows a chart of the routine of handling C.O.D. 
accounts. 



An effective way of decreasing the amount of merchandise 
sent C.O.D., thus restricting the abuse of this privilege, is 
to require a deposit on all C.O.D. Sales. In Boston the 
member stores of the Retail Trade Board have agreed to this 



























































SERVICE TO CUSTOMERS 


581 


regulation, thus reducing largely the number of C.O.D.’s. 
Merchandise may be sent straight C.O.D. only when the 
transaction, in the judgment of the floor superintendent, is a 
bona fide purchase. 

Either a “Part Paid C.O.D. Sale” or two sales, one for the 
cash payment and the second for the balance to be paid on 
delivery, is used to cover the system for the deposit trans¬ 
action. 

Will-calls and Layaways.—The layaway or will-call pur¬ 
chase (purchases made but left to be called for) involves 
more trouble than any other form of sale. While not gen¬ 
erally popular in the East, they are much in demand on the 
Pacific Coa.st, so much so that stores in Los Angeles have 
had to discourage them as being unprofitable to the stores. 

Will-call systems in many organizations take the place of 
an installment business, as they enable persons in very modest 
circumstances to pay for the merchandise a little at a time. 
It is distinguished from the installment plan in that the 
customer does not have the use of the merchandise until pay¬ 
ments are completed. Some stores look upon such sales as 
a distinct addition to their business, having found that those 
who make use of such a plan are maids, low-wage factory 
girls, or the wives of low-salaried husbands whose rating 
naturally does not permit of charge accounts, and who are 
seldom able to purchase outright even the inexpensive gar¬ 
ments they desire. 

In installing a system of this kind the salespeople should 
be carefully instructed to recommend part-payment only as 
a last resort to close a sale. Often a customer will remark 
her inability to pay the price asked for a garment she desires, 
or that she has not the money with her. It is under such 
circumstances that the will-call form of sale is justifiable. 

The first payment is the most important, and should be 
large enough to hold the customer’s interest, and assure the 
final payment. One-third of the purchase price is the ordinary 
form of deposit. 

The following system is used with success in one store: 
When a customer selects a garment to be paid for on this 
policy, the salesperson makes out the sales slip in duplicate, 


582 


THE MERCHANTS’ MANUAL 


exactly as for a charge sale. The customer’s name, address, 
final date for delivery of the garment, its price, the amount 
paid, and the balance due are noted. At the bottom of the 
sales slip the salesperson writes simply “C.O.D. Hold” and 
makes out another sales slip for the cash received, entering on 
her salesbook in the cash column the amount paid and in the 
charge column the amount of the balance due. 

The “charge” duplicate goes to customer as a receipt. The 
original sales slip, cash, etc., are sent along with the garment 
to the wrapping desk where it is held for final payment and 
delivery. 

If there are alterations to be made they are carefully noted 
on a ticket and attached to the garment. The alterations are 
to be made only when the full price has been received. 

When the sales slips for the day are sent to the bookkeeper, 
she enters all “C.O.D. Hold” sales in a separate ledger, sim¬ 
ply charging the item and crediting against it the amount of 
the first deposit thereon. When the customer wishes to make 
additional payments she is sent to this bookkeeper’s desk, 
where she is credited with the amount she then pays and for 
which a formal receipt is issued. When final payment is made 
this office notifies the wrapping department by a printed 
form (with the customer’s name, address and details as to 
the garment, etc., filled in) and prompt delivery is made. 

After the sale is made the salesperson has nothing further 
whatever to do with the transaction. It is handled by the 
office, as explained. 

This store states they have never lost, or had stolen, a single 
package since this system was installed. 

Transfers.—While the transfer card is primarily a service 
to the customer it may be made profitable to the store, if 
properly installed. For example, if a system is used which 
requires writing the customer’s name four or five times, and 
wrapping each bundle separately, it is obviously a drawback 
to the store to have transfer sales. As a matter of fact the 
transfer system ought to offer opportunity for saving in pack¬ 
ing since all but the bulky articles may be wrapped together. 
The service to the customer lies in the great speed obtainable, 


SERVICE TO CUSTOMERS 583 

and the fact that payment can be made for everything at one 
time. 

From a store’s point of view it is not necessary to make out 
a separate salescheck for every purchase, while delivery is 
made at one time and by one process. 

The system used by Lord and Taylor as herewith described 
has proved successful in operation. In a paid and sent sale 
the clerk uses the regular salescheck made out in the ordinary 
way without entering the customer’s name or address on the 
address label. She merely writes the transfer card number 
upon it. See Fig. 114. The sale is entered on the right side 
of the card and a sticker detached, the card being returned 
to the customer. 

The sticker is affixed to the duplicate check on the sales¬ 
clerk’s part, the wrapper’s part being left unpasted. The 
wrapper pastes her part of the sticker on the package, which 
is then sent to the delivery department through regular chan¬ 
nels and held to await the arrival of the card. 

The original check is sent to the transfer desk by a mes¬ 
senger, and compared with card and totaled. The customer 
is given voucher at lower left-hand corner of the card, stamped 
by cashier, when she pays for merchandise. The card with 
all checks is sent to the delivery department, and if all goods 
are found correct, they are packed and sent. 

If the customer wishes to take merchandise with her, a mes¬ 
senger takes parcels to the transfer desk where they are 
packed. 

In case of a charge-send sale, merchandise is wrapped and 
sent to the delivery department with the entire check where 
items are sorted and held until the arrival of the card. 

In all cases the customer surrenders the transfer card upon 
finishing her shopping and receives in return the customer’s 
voucher. This serves as identification in case any complaint 
is made. 

Transfer or shopping cards have recently been discontinued 
by some stores. 

Personal Shopping Service—During the last few years 
the development of personal shopping bureaus in department 
stores has increased considerably. One of the most talked 


584 


THE MERCHANTS’ MANUAL 


of departments of the kind is that conducted by William Tay¬ 
lor Son and Company, of Cleveland, which is known as the 
“Anne Sawyer Personal Shopping Service.” The Taylor store 
features “Anne Sawyer” in much of its daily advertising. 



• Order 

J of 

p-.. ,0-. ! ScrvinB 

Clerk', 

No. 

Check 

No. 

ARTICLE 

AMOUNT 

• 1 






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! 3 






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Shipping Instructions 

[ 5 






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• 7 






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: 9 






: 10 






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charce No. C 12461 | No. C 12461 

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CASHIER'S STAMP 

AMOUNT j OFFICE VOUCHER 

AMOUNT 


1 

i Send to 






No. C 12461 





OFFICE VOUCHER 


CUSTOMER’S COUPON 

RETAIN THIS COUPON 

In case of correspondence regarding this pur¬ 
chase, please refer to TRANSFER. 

No. C 12461 



Fig. 114.—Transfer ticket form. 


In giving the department some name such as Anne Sawyer, 
the customer is made to feel that it is an actual personal 
service. At the same time it is a good advertising feature, 
as such a name can be remembered easily. 

The Bon Marche, Seattle, Washington, operates the personal 
service department under the name of the woman in charge, 
































































SERVICE TO CUSTOMERS 


585 


Frances Grant Heverlo. It was originally formed to help 
the customer to buy, a need especially evident among women 
lacking knowledge of home building. Later mail order work 
was added. 

The Jordan Marsh Company, of Boston, has a successful 
personal shopping department operating under the name of 
“Bureau of Individual Attention.” The name of the person 
in charge, Jane Williams, is used in advertising. 

An interesting development in shopping service has been 
profitable in some cases in catering to the foreign speaking 
customer. Such a service will depend on local conditions. 
R, H. Macy and Company has developed a considerable trade 
with wealthy South Americans and Cubans in this way. 

Furnishing Information.—A usual form of service in the 
personal service bureau is the furnishing of information on 
points of interest in the city. A number of stores have had 
special booklets prepared outlining points of interest in the 
city and directions on how to reach them. This carried con¬ 
siderable advertising value to out-of-town customers of the 
store. 

The securing of necessary hotel accommodations, arranging 
for railway tickets, etc., are also taken care of by many per¬ 
sonal service bureaus. 

A free checking service for visitors is maintained by every 
store of size in the country. 

Treatment of Children in Store.—To help mothers who 
cannot leave their children at home, and who prefer not to 
take them through the store, one store has started a moving 
picture show where youngsters may be left while the mothers 
are doing their shopping. 

Another store has certain sections set aside for caring for 
children, and the space of this room is filled with sand. A 
low, light fence is placed around it. Little tin buckets and 
shovels are furnished so children can have all the necessary 
implements while they are at play. Needless to say, the 
children always insist on going to the store with the sand pile. 

A barber shop for children can often be made a desirable 
feature for the store, especially when such a department can 
be made attractive to the children. The child who is accom- 


580 


THE MERCHANTS ’ MANUAL 


panied by his mother to a children’s barber shop forms in his 
early years an attraction for that particular shop which per¬ 
sists with the child when grown older. 

A children’s barber shop should be decorated with fixtures 
pleasing to the child. In fact, the whole atmosphere of the 
place should be that of a play room. A favorite plan is to 
have the chairs in the shape of hobby horses, which are raised 
or lowered on regulation hydraulic bases. 

Some stores run a department of this kind without making 
any profit on it, as one of the service features of the store. 
Generally this department is leased. All fixtures, except 
movable chairs, tools, etc., are furnished by the store. The 
barber furnishes chairs, tools, and accessories. The store 
supplies light, heat, and in some cases cashier and porter 
service. In return the barber gives 20 per cent of the receipts. 
In some cases he reimburses the store at the rate of 6 per cent 
per year for the store’s investment in fitting out the quarters 
for use as a barber shop. 

A beauty parlor run in conjunction with the children’s 
barber shop may be made a good service feature in the store. 
Such parlors usually pay 15 per cent of their receipts to the 
store. 

Restaurants, Rest Rooms, Etc.—Unquestionably the secret 
of having a first class restaurant or tea room is having the 
proper person at the head of it. This means more than a 
mere knowledge of culinary arts. It entails executive ability 
and a pleasing personality. 

Naturally, the pretentiousness of the restaurant or tea room 
service will depend a great deal on the size of the store. L. 
Bamberger and Company, of Newark, employ about thirty- 
four people in their general kitchen and about ninety in the 
dining room. Their method of operating or merchandising is, 
in general, to provide better food than is served in restaurants 
of the same class at a smaller charge to the customer. A 
large profit to them is a secondary consideration. 

The rest room is a part of all department store service plans, 
the difference lying in the pretentiousness of the fixtures and 
facilities furnished, such as writing materials, telephones, etc. 


SERVICE TO CUSTOMERS 


587 


Some stores have circulating libraries operated as a leased 
department. 

Many stores have sub-postal stations, but in many cases 
they are operated at a loss, and in the opinion of many stores 
the public does not appreciate this service sufficiently to 
justify the cost. 

Special Services.—In addition to the many types of ser¬ 
vices already enumerated, there are many services for use on 
special occasions or peculiar to a particular store. 

Several stores give musical concerts during anniversaries 
and at other times when it is felt desirable. Some stores have 
personally conducted tours of the store as a means of eliciting 
interest. 

The so-called “Gift Granny” idea, which helps people to 
find out what their friends would like at gift times, has at¬ 
tained success in some sections. Given the name of the person 
to whom it is desired to present a gift, the Gift Granny writes 
a letter to that person requesting a list of articles desired as 
Christmas presents, and asking for color, size and general 
description. 

One large Eastern store installed a special evening telephone 
service, through which orders are received until 9 o’clock. 
This permits taking advantage of advertisements appearing 
in the evening papers. GimbePs, in their New York store, and 
also R. H. Macy and Company, have a special order depart¬ 
ment in the lobby of the store where orders may be received 
before the opening hour to accommodate office workers who 
cannot shop during the day and who have time to do so on 
their way to business. 

Classes in embroidery, knitting, or any particular fad such 
as lamp-shade making, weaving or beading, are often used 
as a means of attracting trade. 


CHAPTER XXXVIII 


RELATIONS WITH CUSTOMERS 

Good will, which is conceded to be one of the store’s greatest 
assets, is dependent largely upon the nature of the store’s 
relations with its customers. During the course of every day, 
many occasions arise when the customer and- the store are at 
issue due to questions of policy, conduct of salespeople, mis¬ 
takes in credit, wrong delivery, etc. It is the manner in which 
these points of complaint are adjusted which will decide the 
opinion of many customers in regard to the store. 

The Adjustment of Complaints.—That the customer is 
always right, is a sentiment originally attributed to Marshall 
Field and adopted with various degrees of unanimity by the 
department stores of the country. Many complaints are 
entirely justified, and these may be settled expeditiously with¬ 
out argument. Many others, however, are regarded by the 
store as unreasonable. It is at this point that the policy of 
the store in regard to complaints becomes effective. 

While it is best to consider the customer’s viewpoint in all 
cases, there are some occasions when the complaint of the 
customer is so plainly unwarranted that compliance must be 
refused. There are other cases, notably in regard to mer- J 
chandise desired to be returned, where the rules forbid such 
action. 

One of the most frequent complaints in regard to mer¬ 
chandise concerns the color. It is a well-known fact that sun- 
fast dyes are the exception rather than the. rule. The respon¬ 
sibility for accurate representation of the facts in regard to 
the merchandise rests on the shoulders of the salespeople. 
Freedom from misrepresentation will eliminate one of the 
most frequent sources of complaints. 

The Adjustment Department.—The duties of the adjust¬ 
ment department are threefold: 

588 


RELATIONS WITH CUSTOMERS 


589 


1. To handle the customer in such a way that from a 
potential enemy she is made a friend. The mere fact that a 
customer is prepared to make a complaint indicates dissatis¬ 
faction. Postponement or delay in the adjustment of a com¬ 
plaint is likely to breed further trouble. 

2. To see that all just claims are settled in full without 
argument, and to see that all other claims are explained to the 
customer’s satisfaction. In other words, the shopper must be 
convinced that the right decision has been reached. 

3. To see that the mistake does not happen again, if this is 
in any way possible. Tabulating complaints usually gives 
some instructive results. 

Tactful treatment of customers with complaints is a funda¬ 
mental. For this reason the adjustment of complaints by 
heads of departments is to be discouraged, since knowledge of 
merchandise does not in any way imply a knowledge of 
handling people. It is better to have an adjustment depart¬ 
ment in charge of a person able to extend sympathy under 
difficult circumstances. It is well to remember that what is 
done should be done graciously. To grant a customer’s request 
and at the same time show a grudging or offensive spirit is to 
waste whatever the concession costs the store. Graciousness 
doubles the effect of the granted concession. 

Location of Office.—An important factor in the location 
of the adjustment office is that it should be in a position easily 
accessible to the public. In several of the New York stores 
the bureau of adjustment is located on the balcony of the main 
floor. This latter position seems to be an ideal place. 

It is not desirable to use the word “complaint” in connection 
with such an office, but rather to designate it as a bureau of 
merchandise, or credit adjustment. 

Combining the adjustment of credit and merchandise com¬ 
plaints is handled in various ways. Most stores handle their 
credit complaints directly in their credit department, where 
records are easily accessible. Credit complaints can be more 
intelligently handled by the credit manager or assistant credit 
manager than can be done in the regular adjustment depart¬ 
ment. If there are more credit complaints than merchandise 


590 


THE MERCHANTS’ MANUAL 


complaints, it might be well to locate both departments in 
close proximity. 

Telephone Complaints.—In many cases complaints are 
received over the telephone. The best method of handling 
such complaints is to have a universal rule made in all depart¬ 
ment that when any employee receives a complaint over the 
telephone he or she immediately connects the person mak¬ 
ing the complaint with the bureau of adjustment. If it is 
not possible for the bureau of adjustment to settle the matter 
over the telephone at that time, a memorandum should be 
made by this department and the matter referred to the proper 
department for settlement. The bureau of adjustment should 
keep a follow-up on all these memorandums and see that they 
are promptly attended to. 

In stores where no bureau of adjustment exists, telephone 
complaints should be referred to the superintendent’s office. 
The superintendent should have a member of his staff make 
a memorandum of these complaints and then turn them over 
to the proper individual in the store for settlement. This 
person should check memorandums daily and see that com¬ 
plaints are promptly attended to and that customers are 
notified. 

By installing either of the above systems it is possible to 
do away with customers making complaints directly to depart¬ 
ments, and then having the persons in these particular depart¬ 
ments forget or neglect to attend to them, thereby causing 
much annoyance to the customer and loss of good will to the 
store. 

Central Adjustment Committees.—The study of com¬ 
plaints in certain departments invariably reveals certain 
causes. By comparing the complaints in a number of stores 
the results are made more authentic. The action of the Retail 
Trade Board of the Boston Chamber of Commerce in attempt¬ 
ing to form definite policies of adjustment from collective 
data is important as a step towards forming a standard by 
which to judge complaints by customers. 

Hosiery, gloves and shoes are said to be first in number of 
cases requiring adjustment. A statistical report was made by 
each store showing the number and type of problems en- 


RELATIONS WITH CUSTOMERS 


591 


countered in the course of hosiery adjustment during the 
month. The information was charted under the following 
headings: 

Heel 

Toe 

Friction wear 
Instep 

Hose supporter wear 
Tight skirts 
Runs 

Other causes. 

A booklet was then prepared to be placed in the package 
with each purchase of hosiery describing the right and wrong 
methods of putting on and removing stockings, fastening sup¬ 
porters, washing, etc. 

The Abraham and Straus Plan.—Methods of adjustment 
differ in various stores but it is possible to obtain valuable 
suggestions from a plan such as the following, described by 
C. Dudleigh Roberts, manager of the adjustment department 
of Abraham and Straus, of Brooklyn. 

The store has a personal representative on each floor, located 
in the offices of the floor superintendents. Merchandise adjust¬ 
ments are taken up with the heads of stock and buyers. Com¬ 
plaints of delayed delivery, shortages, etc., may be given to 
the aisle men, who will record and forward them for inves¬ 
tigation. 

The adjuster is appealed to for a decision when a customer 
desires to return merchandise that has been in her possession 
more than seven days, or without a salescheck, or when she 
has been under-credited on a return of merchandise, or if she 
wishes to register a tracer on merchandise which has been 
delayed in delivery. 

The chief aim of the adjustment department is to make a 
thorough analysis of the cause of the complaint on what is 
called an “analysis of adjustment” sheet. This sheet has six 
general heads: Delivery, merchandise, auditing, adjustments, 
miscellaneous, totals. 

The general heads are subdivided into twenty divisions as, 
for example: Non-delivery, wrong merchandise, damaged mer- 


592 


THE MERCHANTS' MANUAL 


chandising, shortages, bookkeeping errors, merchandise sent 
C.O.D. instead of charge, wrong charge in store, etc. 

The totals column gives comparison of total adjustments for 
each department with that of the previous week. Weekly 
reports give in detail the adjustment number, the article in 
question, the cause of complaint and who or what is respon¬ 
sible for the complaint. 

Four copies of this report are made out: one for the per¬ 
sonnel department; one to the buyer of the department, one 
to the executive of the department of supervision, and one for 
the records of the adjustment department. The recipients of 
the reports must take action to remove or remedy the causes 
of complaint. 

Figure 115 shows the form of complaint tracer used to record 
information in regard to non-delivery of merchandise. The 
back of this tracer provides a place for recording every step 
necessary to be taken during the investigation. The two upper 
stubs on the complaint tracer are used for registration and con¬ 
trol of the progress of the complaint towards adjustment. 
The bottom or “analysis stub” is filled out when the adjust¬ 
ment is made, and from this the detailed weekly reports are 
made out. 

The Wanamaker Adjustment Bureau.—Wanamaker’s, 
New York, has found that the largest proportion of com¬ 
plaints is caused by non-delivery of merchandise or delay in 
receipt by customers. Fifty per cent of the complaints re¬ 
ceived by its adjustment department is due to this cause. 
Thirty-seven per cent is due to merchandise being found 
unsatisfactory by the customer. Cancellation of orders, mer¬ 
chandise short or incorrectly charged, and goods delivered in 
error, are much less important in number. 

The Wanamaker Bureau of Adjustment uses some twenty 
form letters in settling complaints with customers. Complete 
record of all complaints is kept in a large size entry book, on 
each page of which are listed from left to right the name and 
address of the customer, the nature of the complaint, name 
of tracer, date of settlement, final disposition of the case, 
amount of the merchandise, cause of the trouble and space 
for additional remarks. 


RELATIONS WITH CUSTOMERS 


593 


Approvals.—Practically all stores today are trying to dis¬ 
courage the selling of merchandise on approval. In fact, 
many organizations have made a definite rule that no mer¬ 
chandise can leave their store on approval. Many stores 
limit approval sales to charge customers only, while other 


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( Abraham, and Straus.) 

Fig. 115.—Form of complaint tracer showing both front and back. 


concerns allow merchandise to be sold on approval in certain 
departments only, such as rugs, furniture, and upholstery 
goods. 

In connection with merchandise sold on approval, the sales¬ 
person is required to make out a memorandum salescheck 
and have this approved by the department manager. This 

38 









































































































594 


THE MERCHANTS’ MANUAL 


check is authorized in the same manner as a regular charge 
transaction in order to find out the financial responsibility of 
the customer. The sale is then posted upon a memorandum 
ledger, and this ledger is balanced every month. If the mer¬ 
chandise is returned, a memorandum credit slip is made out 
and the credit is handled in the same manner as the credit of 
any ordinary cash sale. 

When the merchandise is sold, the salesperson and the cus¬ 
tomer usually come to some agreement as to how long mer¬ 
chandise may be kept out on approval. This time usually 
runs from two to three days. 

Returned Goods.—The matter of handling return of mer¬ 
chandise is one to which every retailer must give careful 
thought and consideration. While on the one hand, he must 
protect himself, on the other hand he must deal with the 
customer tactfully and with discretion. 

When a customer enters the store to return an article or to 
make a complaint in regard to it, she naturally proceeds at 
once to the department and to the salesperson who sold the 
merchandise to her. The salesperson should treat the customer 
courteously and immediately refer the case to the store super¬ 
intendent, buyer, or section manager. If the merchandise is 
in as good condition as when sold, and the customer wishes 
another article in the same department, the floor superintendent 
should have the authority to allow the exchange to go through 
with as little loss of time to the customer as possible. 

However, if the claim is considered unjust for any reason, 
the customer should be courteously directed to the adjustment 
bureau. If it is evident that the adjustment will not terminate 
satisfactorily to the customer and she is a charge customer, it 
is well to send for the credit manager to take part in the 
consultation. 

Since the loss of one customer may create a bad impression 
and cause the store much harm, it is necessary to treat all 
cases in a most tactful manner. Everything possible should 
be done to show the customer that the fault is not with the 
merchandise nor with the store service. If the customer 
categorically insists upon an adjustment, and if the store con¬ 
siders the customer’s patronage is worth while keeping, and 


RELATIONS WITH CUSTOMERS 


595 


the loss is small, it is usually worth while to make the adjust¬ 
ment and retain the good will of the customer. 

According to George Waterford, Credit Manager of Best 
and Company, there are five distinct objectionable practices 
employed by customers in returning merchandise: 

1. The customer who orders an expensive dress or wrap 
sent “special” with the intention of wearing it at some im¬ 
portant function. The next day a request is sent that the 
article be called for on the grounds that the husband did not 
care for it, or that she would like to make another selection. 

2. The customer who is out shopping with a friend upon 
whom she desires to make an impression, orders merchandise 
charged and sent to her home without having the slightest 
intention of keeping it. 

3. The customer who orders expensive articles of wearing 
apparel sent to her house, where she has her own dressmaker 
copy the design. When that is completed, the article is 
returned, sometimes without any explanation whatever. 

4. The customer whose husband is a manufacturer in the 
same line of business, and who wishes to copy the design for 
his own use. 

5. The customer who cannot make up her own mind as to 
her selection. In Mr. Waterford’s opinion this type of cus¬ 
tomer should be educated by the salesperson to make a positive 
decision at the time of the purchase. 

Time Limits.—It is important to have a definite time limit 
beyond which returns will not be accepted except in special 
cases. In New York it is the general practice to allow a 
seven-day limit with which charge or other customers may 
return merchandise for good cause. If the merchandise is 
returned within the specified period, the store refunds, or what 
is equivalent to it, allows credit to a charge customer for the 
full purchase price, irrespective of whether the price of the 
article has been reduced since the purchase or not. 

According to law, a store would be obliged to refund or give 
credit for the full purchase price if the store agreed to accept 
the merchandise back. Since every sale is a contract volun¬ 
tarily entered into between the customer and the store, the 
acceptance of returned merchandise by a store is, in effect, a 


596 


THE MERCHANTS’ MANUAL 


rescission of that contract. Therefore, the law holds that when 
a contract has been rescinded, the parties to the said con¬ 
tract must return to the original status that they were in 
before entering into the agreement. This, in effect, means 
that the store must get its merchandise back in good con¬ 
dition, and the customer must get back what she paid. 

If a customer desires to return goods after the seven-day 
limit, then it is entirely up to the store’s discretion: first, 
whether the merchandise shall be taken back at all, and, 
second, whether the original purchase price is to be returned 
or the reduced price if there has been a reduction. In such a 
case stores usually refund or give credit for the reduced price, 
since the customer has forfeited her rights to return the goods. 

As said before, allowance must be made for special cases. 
Rules should be stretched to suit the individual case. If an 
especially good charge customer has bought a suite of furniture 
for $500, and two or three days later the store reduces the 
price to $400, it is reasonable to believe that the customer is 
going to protest. In such a case it might be excellent policy 
to allow $100 credit. 

Local Agreements.—When commodity prices were at high 
peak during and directly after the war, many cities took con¬ 
certed action towards regulating the return of merchandise. 
In Cleveland, the Retail Merchants’ Board of the local Cham¬ 
ber of Commerce published a series of advertisements giving 
information as to the use and abuse of the returned mer¬ 
chandise privilege. 

In view of the satisfactory results obtained from this and 
similar campaigns, it is somewhat surprising to note that the 
pressure of competition undid much of the valuable progress 
made at that time. Action by local retailers and the adoption 
of a uniform policy will go far towards reducing returns to a 
nominal figure, as has been proved by past experience. 

Rules for Returns.—There are certain rules which are 
common to the majority of cases where returns are regulated. 
The time limit has already been discussed. Seven days, how¬ 
ever, is not a universal application. Some cities limit returns 
to three and even two days, while St. Louis retailers have 
agreed to accept no returns whatsoever. 


RELATIONS WITH CUSTOMERS 


597 


As a general rule no articles will be accepted for return 
unless they are substantially in their original condition; neither 
will merchandise of any kind which has been used or worn be 
accepted for return unless defects are not as represented. 

A salescheck should accompany all returned merchandise. 
In cases where there is no salescheck, the customer must be 
sent to the adjustment bureau. 

Certain articles may not be returned for legal or sanitary 
reasons. The following notice sent to customers by Mandel 
Brothers of Chicago is typical: 

TO OUR PATRONS 

In compliance with an order received from Dr. John Dill Robertson, 
Commissioner of Health, we must, on and after Feb. 15, 1921, decline 
to accept for return or exchange: 

Druggists’ Sundries, such as Rubber Goods, Brushes, Combs, Cos¬ 
metics and Soaps of all kinds. 

Sanitary Couches and Bedding of all kinds. 

Toys, Dolls and Baby Carriages. 

Men’s, Women’s, Children’s and Infants’ Hosiery and Underwear of 

all kinds. 

Night Gowns and Pajamas. 

Women’s Neckwear and Veilings. 

Exceptions to the above mentioned lines of apparel will be made 
only when the merchandise shows defects, or the wrong size or color 
has been selected, in which case such goods, if in a salable and thor¬ 
oughly sanitary condition, may be accepted for return or exchange, 
when returned within a reasonable length of time. 

No article of wearing apparel that shows any evidence of wear 
may be accepted for return or exchange. 

We ask our patrons to make their selections with great care, bring¬ 
ing children to the store to be fitted, and to take such action as may 
be necessary to minimize the return of all kinds of merchandise. 

We are confident'that, owing to the importance of this matter, our 
patrons will cooperate with us in helping to maintain Chicago the 
most healthful city in the world. 

MANDEL BROTHERS. 

Feb. 15, 1921. 

Gifts of all kinds, Christmas, wedding, birthday, etc., if 
returned, will be accepted only in exchange for other mer¬ 
chandise. 

Goods cut from the piece at the request of the customer and 
returned through no fault of the merchandise, are returnable, 


598 


THE MERCHANTS ’ MANUAL 


according to one ruling, with the following losses to the cus¬ 
tomer: In silks, wool dress goods, and wash dress goods, single 
width, loss of one-half yard on piece of less than three and 
one-half yards in length, and a loss of one-quarter yard on a 
piece of three and one-half to six yards in length. In silks, 
wool dress goods, and wash dress goods, double width, a loss 
of one-half yard on a piece of less than two and one-half 
yards in length; a loss of one-quarter yard on a piece of two 
and one-half yards to six yards in length. For cotton, linen, 
upholstery, laces, dress trimmings, and ribbons on a length of 
two yards or less there is a loss of one-half yard. 

Where a non-detachable tag is used on articles bought with 
the privilege of returning, if the tag has been removed the 
article will not be accepted for return. This rule is strictly 
adhered to. A non-detachable tag is placed on articles by 
means of a seal which must be broken to remove the tag. 
Expensive evening gowns, trimmed hats, oriental rugs, and 
other articles of value are often tagged in this manner. 

In Worcester, Massachusetts, customers in the habit of re¬ 
turning merchandise, and makers of unjust claims, are to be 
reported to the Credit Reporting Bureau of the Worcester 
Chamber of Commerce and the Advisory Committee of the 
Credit Reporting Bureau to take such action as they may 
think proper in regard to closing the account. Each signer 
of the rules agrees to report quarterly the names of customers 
who during that period have returned 33% per cent or more 
of all goods purchased. 

Returns on Will-call Purchases.— Refunding money on 
“will-call” purchases requires the exercise of considerable 
judgment. Most stores pursue a very liberal policy. In every 
case where the merchandise has not been damaged or its 
salability decreased by being held for the customer they 
return the deposit. 

In case an alteration has been made on the goods, the best 
procedure is to obtain as large a deposit as possible. Then 
after the alteration has been made, if the customer changes 
her mind, it is necessary for a fair decision to be made, depend¬ 
ing on the particular case. If the garment cannot be sold very 
easily to somebody else on account of the alteration, the 


RELATIONS WITH CUSTOMERS 


599 


practice usually is to keep the entire deposit. If, however, 
the garment may still be sold to somebody else without much 
difficulty, it is best to take out of the deposit as much as the 
alteration has cost and refund the rest to the customer. 

In the case of furs or other merchandise which may be 
damaged by being held over a long period, or the salability 
of which may be decreased on account of its passing out of 
style, it is best to get a fairly large deposit, certainly not less 
than 25 per cent, and to have the customer set a date when 
she will call for the goods. If she does not call on that date, 
she should be sent notice to call shortly and pay the balance 
or the garment will be put back in stock and the deposit 
refunded to her. Sixty days is the usual limit. 





































































































. 






























INDEX 


A 

Abraham & Straus, adjustment 
methods, 591 
advertising control, 402 
payroll control, 290 
Absences, employees, 158, 552 
Accidents, store, 158 
Accounts, charge (see Charge ac¬ 
counts) 

cost system, 356 
payable, 267 
receivable, 262 
retail system of, 356 
standardization of, 259 
(see also Records, Expense, 
Assets, Liabilities, etc.) 
Adding machines, 55 
Address, change in employees, 158 
Addressing machines, use of, 54 
Adjustment committees, 590 
department, 588 
methods of, 591 
of complaints, 588 
office, 589 

Administrative control, 143 
Advertising, appropriations, 400 
bargain basement, 452 
condensed appeal, 411 
copy, 421 
cost of, 402 
department, 398 
direct mail, 468 
distinctiveness in, 415 
effect on location of, 16 
effect on turnover of, 392 
essentials of, 416 
expense, 276 
fashion, 400 
gravure, 420 


Advertising, illustrations, 417 
institutional, 405 
layout, 423 
manager, 146 
national, 392 
novelty, 413 
outdoor, 420 
poster, 427 
price, 406 
quality, 412 

results of checking, 404 
store-wide, 409 
street car, 427 
tests of, 405 
timely, 408 
type, 420 

Aisle tables, 48, 450 
Alteration department, 125 
Altman, B., & Co., charge versus 
cash sales, 229 
mail order plans, 470 
manufacturing policy, 123 
Analysis, merchandise, 312 
traffic, 17 

Anderson, Congressman Sidney, 
392 

Appliances, store, 54 
Appropriation, advertising, 400 
Approvals, 593 

Arnold, Constable & Co., charge 
authorization plan, 90 
Arnold, Perry, 420 
Assets, accounts receivable, 262 
cash, 262 
current, 261 
deferred charges, 264 
definition of, 200 
intangible, 263 
inventory, 262 
notes receivable, 262 


601 


602 


INDEX 


Assets, other, 263 
permanent, 264 
United States securities, 263 
Associated Dry Goods Corpora¬ 
tion, 175 

Associated Retail Credit Men of 
New York, 236 
Associations, cooperative, 566 
Auditing department, functions of, 
192 

Auerbach, Joseph B., 224 
Authorization, automatic, 222 
charge, 90 

Authorizers, authority of, 222 
Ayres, L. S., Co., lunch room, 567 

B 

Bailey Co., credit slips, 221 
Balance sheet, 260 
Bamberger & Co., L., executive 
board, 143 
merit system, 533 
outdoor advertising, 426 
restaurant, 586 

Background, essentials of, 438 
seasonal, 439 
Banks, financing by, 170 
Bargain basements, 450 
sales, 450 

Barometer, business, 246 
Basement, bargain, 450 
store, 44 

Beebe, Dwight E., 230 
Bendel, Henri, credit policy, 238 
Best & Co., advertising, 413 
aisle manager’s report, 165 
returned goods policies, 595 
use of gummed stickers, 95 
Beyer, John H., 433 
Blackstone, Franklin, 203 
Blanke, T. L, 261, 356, 381 
Bloomingdale’s index system, 224 
mail credit solicitation, 225 
Board of directors, store, 142 
Bonds, financing by, 176 


Bon Marche, Seattle, Washington, 
584 

Bonus, buyers’, 549 
drivers’, 113 
executives’, 549 
non-selling force, 548 
rates, 548 
selling force, 547 
systems, 546 

Boston Retail Trade Board, 120, 
580, 590 

traffic count, 19 

Boyd-Richardson, securing new 
charge accounts, 226 
Budget, expense, 288 
practices, 288 
requirements for, 287 
Building, care of, 158 
Bulletins, store, 158 
Burgess-Nash Co., window records, 
429 

Bush Terminal Co., 334 
Business barometers, 246 
Buyer, assistant, 338 
compensation of, 353 
functions of, 145 
reports, 347, 352 
requisites for, 337 
Buying associations, 332 
channels, 331 
ethics, 345 
exchanges, 334 
from middlemen, 331 
public, 341 

resident buying organizations, 
334 

staple departments, 344 
style departments, 342 

C 

Carson, Pirie, Scott & Co., 475 
Cashier, automatic, 55 
use of, 57 
Cash, assets, 262 
records, 195 


INDEX 


603 


Cash register, auditing of, 196 
errors in, 532 
for charge accounts, 58 
floormen and, 533 
versus tube systems, 57 
Catalogues, mail order, 478 
Ceilings, store, 26 
Central wrap system, 88 
Charge accounts, authorization of, 
219 

cash register for, 58 
collection of, 232 
closure of, 233 
employees, 159 
overdue, 231 
receiving new, 225 
Charge purchases, authorization 
of, 90 

Charting, 251 
Chase, James T., 163 
Checking merchandise, 74 
Chicago American, 418 
Chicago, traffic count, 19 
Children, treatment of in store, 
585 

Chiropody for employees, 562 
Claims, filing of, 66 
Clark, Fred E., 7 
Clarkson, E. R., 247, 253 
Cleveland, traffic count, 19 
Codes, price, 369 
Coin, checking, 219 
system of identification by, 217 
Collection, by collectors, 237 
by legal means, 238 
by telephone, 233 
letters, 235 

of overdue accounts, 232 
Color, use in window display, 439 
Commercial Vehicle delivery cost 
system, 107 

Commission, payment of em¬ 
ployees by, 538 
Comparison department, 145 
shopping, 307 

Complaints, adjustment of, 588 
customers’, 159 


Complaints, delivery, 109 
telephone, 590 
Connolly, Andrew J., 427 
Construction, window, 25 
Containers, fiber, 94 
Contract departments, 125 
Control, administrative, 143 
executive, 142 
merchandising, 311, 324 
planning, 324 
profit, 330 
purchase, 324 
sales, 327 
stock, 328 

Controller, duties of, 149 
Convenience goods, 37 
Conveyors, belt, 87 
gravity roller, 87 
spiral chute, 88 
Cooperative advertising, 426 
associations, 566 
buying associations, 332 
delivery, 119 
Copy, advertising, 421 
Correspondence, appliances for, 54 
employees, 159 
Cost of doing business, 378 
Counter displays, 444 
Cowan, George J., 434 
Credit, applications for, 205 
authorization of, 219 
bureau, 209-214 
department, 202 
exchange, 209 

extension by manufacturers and 
jobbers, 171 
identification, 217 
indexes, 224 
limits, 230 
losses, 229 
manager, 203, 226 
notification, 214 
office location, 50, 202 
references, 206 
returned goods, 197 
statistics, 254 


604 


INDEX 


Critchett, C. H., 230 
Crowley, Milner Co., 404, 427 
Current liabilities, 267 
Customers, direction of, 159, 574 
effect of on store layout, 36 
identification of, 217 

D 

Day, Joseph P., 19, 21 
Dealer helps, 456 
Deferred charges, 264 
payment plan, 239 
Delivery, analysis of problem, 99 
combined, 101 
complaints, 109 
C.O.D., 113 
cooperative, 119 
cost of, 103 
drivers, 112 
electric, 101 
equipment, 116 
gasoline, 101 
horse, 101 
methods of, 100 
parcel post, 120 
policies, 98 

pro rating charges, 107 
room layout, 91 
routing of, 102 
schedules, 108 
special, 111 

standard cost systems, 104 
statistics, 254 
superintendent of, 117 
truck tires, 117 
vehicle design, 116 
Demonstration, aid for teaching 
salesmanship, 517 
Denholm & McKay Co., 88 
Departments, adjustment, 588 
advertising, 398 
alteration, 125 
comparison, 145 
contract, 125 
credit, 202 
direct mail, 468 


Departments, dovetailing of, 346 
employment, 487 
grouping of, 38 
health, 559 
leased, 291 
mail order, 469 
manufacturing, 122, 146 
personnel, 487 
planning, 150 
publicity, 146 
purchasing (see Supply) 
repair, 123 
research, 148 
stenographic, 153 
store service, 148 
supply, 128 

Department store (see Store) 
Detroit Retail Merchants Bu¬ 
reau, 501 
traffic count, 19 
Direct mail advertising, 468 
department, 468 

mailing lists (see Mailing lists) 
media of, 477 
paper, 481 
problems of, 470 
Directory, store, 574 
Discipline, employees, 552 
Discounts, employees, 159 
manufacturers, 354 
sales, 464 

Display, counter, 444 
window (see Window) 

Dives, Pomeroy & Stewart, 541 
Doors, store, 25 
Dress, employees, 159 
Drivers, bonus system for, 113 
records, 113 
training of, 112 

Dry Goods Economist, 129, 346, 
367, 403, 456, 470 
Dry Goods Reporter, 377 
Dry Goods Review, 369 
Dry goods industry, factors in de¬ 
velopment of, 3 


INDEX 


605 


Dry goods store, advertising pol¬ 
icies, 3 

character of goods, 3 
merchandising policies, 4 

E 

Eaton Co., Timothy, testing labo¬ 
ratory, 342 

Educational director, duties, 147 
functions, 505 

Educational systems, for em¬ 
ployees, 34 
Egeler, Chas. R., 218 
Electric signs, 427 
Eleto Co., 120 
Elevators, employees, 159 
freight, 30 
insurance, 186 
location, 29 

manuals for operation of, 160 
number required, 29 
service, 30 

Employees, absenteeism, 552 
application blanks for, 496 
dental work for, 562 
discipline of, 552 
error records, 527 
health, 557 
insurance for, 562 
interviewing, 497 
job analysis, 503 
lunch rooms, 567 
mutual benefit associations, 564 
new, 507 
pensions for, 564 
physical examination, 501 
placement of, 503 
promotion of, 534 
rating schedules, 522 
records, 522 
references, 500 
remuneration of, 537 
selection of, 494 
service to, 552 
shopping hours for, 556 
tardiness, 552 


Employees, tests, 501 
training of, 506-536 
vacations, 555 
welfare of, 557 
Emmons, Dr. Arthur B., 560 
Employment manager, duties of, 
147 

Emporium, The, 451, 497 
Engard, Walter, 376 
Entrance, effect on store layout, 
36 

employees, 159 
freight, 25 
store, 24 

Equipment, office, 53 
sales, 51 

Erb, Henry S., 544 
Errors, cash register, 532 
sales, 530 
types of, 532 
Escalators, store, 28 
Exchanges, buying, 334 
resident buying, 334 
Executive control, 142 
store, 156 
training, 518 

Exhibits, merchandise, 514 
Expense, advertising, 276 
alteration department, 287 
budgeting, 287 
classification by groups, 278 
communication, 277 
depreciation, 276 
distribution of, 281 
divisions of, 275 
insurance, 278 
interest, 277 

professional services, 278 
proration of, 281 
rentals, 276 
repairs, 278 
salary and wages, 276 
service purchased, 277 
supplies, 277 
taxes, 276 
traveling, 277 
unclassified, 277 


606 


INDEX 


Express, receiving record, 72 
Exterior, store, 26 

F 

Facade, store, 23 
Fair, The, electric signs, 427 
new charge accounts, 225 
stock issues, 175 

Famous & Barr Co., drivers’ bonus 
system, 114 

Filene’s Sons Co., Wm., automatic 
bargain basement, 451 
credit form, 216 
delivery policies, 98 
executive committee, 143 
grouping of departments, 38 
job analyses, 504 
organization plan, 142, 144 
planning department, 151 
stock control system, 329 
store executive, 156 
want slip system, 304 
Filing, devices for, 56 
Financing, banks, 170 
bonds, 176 
common stock, 175 
current funds, 170 
distribution of securities, 177 
emergency, 177 
external, 174 
internal, 174 
Morris plan, 242 
planning requirements, 172 
preferred stock, 175 
Fire insurance, 183 
Fixtures, effect of products on, 52 
standardization of, 53 
stock, importance of, 51 
Flooring, store, 26 
Floor manager, care of depart¬ 
ment, 165 
functions, 163 
reports, 166 

supervision of employees, 165 
Floor rentals, 282 


Franklin Simon Co., advertising 
policy, 406 

charge versus cash sales, 229 
credit application form, 205 
credit letters, 236 
Friedman, J. P., 288 

G 

Gift certificates, 465 
Gilchrist Co., 163, 565 
Gimbel Bros., advertising depart¬ 
ment, 399 

advertising policy, 406 
conditional bill of sale, 239 
employees tardiness, 553 
manufacturing policy, 123 
securing employees, 490 
stock issues, 175 
telephone service, 587 
Gladding Dry Goods Co., factors 
in display, 437 

Globe & Rutgers Insurance Co., 
67 

Good will, value of, 265 
Gould, T. V., 235, 236 
Graphs, use of, 251 
Gravure, advertising, 420 
Gross sales, 269 
Group insurance, 563 
Guarantee, store, 4 

H 

Hahne & Co., instalment selling 
plan, 239 

Halle Bros., advertising depart¬ 
ment, 398 

signature system, 218 
Harvard Bureau of Business Re¬ 
search, 247, 257, 378, 380, 397 
Harvard Medical School, 559 
Hastings, Ernest C., 367 
Headlines, value of, 421 
Head of stock, 338 
Health department, 559 
of employees, 557 



INDEX 


607 


Hearn, James A., & Co., 427 
Heating, store, 32 
Horne Co., Joseph, 203, 427 
Horine, Merrill C., 107 
Hospital, employees, 159 
Hotchkin, W. R., 402 
Houghton, Dutton Co., delivery 
schedules, 108 
Hours, business, 159 
closing, 556 
House organs, 568 
Hubbart, Guy, 413 
Hudson Co., J. L., credit man¬ 
agers, 203 
delivery room, 91 
direct mail, 481 
distant delivery plan, 93 
price changing methods, 370 
vacation schedules, 555 
vehicle inspection system, 119 
window display, 431 

I 

Identification, coin system, 217 
of customers, 217 
signature system, 218 
Illustrations, use in advertising, 

417 

Impulse goods, 37 
Income, other, 274 
Indexes, credit, 224 
Information, customers, 574 
methods of furnishing, 585 
Inspection method, 57 
Instalment selling, 239 
Insurance broker, 180 
burglary, 188 
coinsurance clause, 183 
company choice of, 181 
druggists’ liability, 187 
elevator, 186 
expense, 278 
fire, 183 
fleet, 186 
group, 562 
liability, 185 


Insurance policy, 181 
procedure in case of loss, 182 
rain, 188 

requirements, 180 
transit, 67, 187 
workmen’s compensation, 186 
Interest, expense, 277 
Interior, store, 26 
Inventories, as assets, 262 
cost method, 273 
forms, 361 
perpetual, 366 
physical, 289 
retail method, 273 
supply department, 131 
Invoice, dummy, 74 
routing, 73 
Island windows, 24 

J 

Jensen Company, A. M., layout, 
41 

Job analysis, 503 

Joint Commission of Agricultural 
Inquiry, 393 

Jordan Marsh Co., absenteeism 
policy, 554 

central wrap system, 88, 89 
credit limits, 230 
employment office layout, 488 
library, 567 
organization plan, 144 
personal shopping department, 
585 

planning department, 150, 151 
promise department, 146 
salvage system, 94 
stenographic department, 153 

K 

Kaufman, D. J., 406 
Kaufman & Baer, 449 
Kirstein, Louis E., 301 
Klein, Inc., L., 445 
Klingaman, Prof. 0. E., 302 


608 


INDEX 


L 

Labor, coordinating supply with 
demand, 494 
turnover, 492 
Lamson Co., The, 44 
Layaway purchases, 581 
Layout, advertising, 423 
delivery room, 91 
main floor, 39 
office, 49 

personnel department, 488 

retail district, 14 

small store, 46 

stock room, 79 

store, 35 

top floor, 50 

upper floors, 42 

Leased departments, advantages 
to store, 292 
lease form, 294 
prevalence of system, 291 
reasons for, 292 
terms, 293 

Letters, collection, 235 
form, 478 

Lewis & Son Dry Goods Co., A. 
T., 478 

Liabilities, accounts payable, 267 
current, 267 
definition, 260 
notes payable, 267 
Liability insurance, 185 
Libraries, employees, 515 
Lighting, arrangement of units, 31 
colored, 32 
showcase, 32 
store, 30 
wall case, 32 
window, 31 

Lines, number carried, 385 
Location, accessibility of, 18 
advertising, effect on, 16 
analysis of, 17 
corner, 18 

effect on delivery problem, 19 
importance of, 13 


Location, overcoming defects in, 16 
physical factors in, 17 
purchasing power and, 20 
shifting of, 14 
store layout and, 36 
suburban, 21 
(see also Retail district) 

Loeser Co., Fred., 427 
L.O.G. vouchers, 200 
Lord & Taylor, advertising, 415 
cafeteria, 567 

charge versus cash policies, 229 
credit slip, 192 
delivery system, 120 
financial policy, 171 
manufacturing policy, 123 
transfer card, 583 
window construction, 435 
Los Angeles Retail Merchants’ 
Credit Association, 212 
Lunch rooms, employees, 567 
Lurie, Ira A., 21 
Luxury goods, 37 

M 

Machines, adding, 55 
addressing, 54 
bookkeeping, 55 

Macy & Co., R. H., advertising 
policy, 405 
buyers, reports, 352 
display practice, 430 
drivers’ checking sheets, 113 
electric sign, 427 
general manager, 144 
manufacturing departments, 122 
planning department, 151 
purchasing department, 128, 129, 
134 

salescheck, 191 

section manager’s report, 165 
securing employees, 490 
shopping service, 585 
special order department, 587 
stock issues, 175 


INDEX 


Macy & Co., R. H., store council, 
143 

tube system, 58 
Macy, Rowland H., 4 
Mahin, John Lee, 405 
Mail, cash, 154 
handling of, 153 
personal, 154 
reading, 155 

Mailing lists, classification of, 475 
revisions of, 476 
sources of, 472 
use of, 476 

Mail order booklets, 479 
bulletins, 479 
department, 469 
Malet, A. W., 433 
Management, office, 151 
store, 162 

Mandel Bros., markdown system, 
370 

returned goods policy, 597 
Manuals, assistant buyer’s, 161 
department, 161 
elevator, 160 
general, 158 
merchandise, 513 
office, 160 
salespersons, 162 
service, 160 
store, 157-161 

Manufacturers, buying from, 331 
Manufacturing department, 122 
Markdowns, reasons for, 395 
supervision of, 370 
Market survey, 301 
zones, 21 

Marking merchandise, 75 
price, 368 

Mark up, methods of figuring, 374 
percentage of, 374 
Marshall Field & Co., bargain 
basement, 451 
buying policies, 341 
complaint policy, 588 
counter display, 444 
employees, 497 


609 

Marshall Field & Co., general 
manual, 158 
library, 568 

test of advertising, 418 
Materials, testing of, 341 
May Department Stores, stock is¬ 
sues, 175 

McCreery & Co., James, advertis¬ 
ing, 409 

charge versus cash sales, 229 
delivery system, 120 
layout, 43 

personnel department, 488 
rating card for employees, 525 
window display, 433 
Memorandum charges, 198 
Merchandise, analysis of, 312 
checking, 74 
classification of, 36 
exhibits, 514 
marking, 75 
packing, 93 
routing of, 72 
warehouse, 85 

Merchandise manager, assistant, 
145 

functions of, 144, 336 
Merchandising, control, 311, 324 
planning, 317 

Merchant, benefits of organization 
to, 6 

limitations of responsibilities, 6 
responsibilities of, 5 
Mezzanines, store, 50 
Middlemen, buying from, 331 
Millard, E. B., 342 
Mills, J. B., 481 
Morris Plan, 242 

Moving pictures, training em¬ 
ployees by, 515 
Multigraph, use of, 55 
Mutual Benefit Associations, 564 

N 

Namm & Son, A. I., organization, 

144 

National Lamp Works, 31 


39 


610 


INDEX 


National Retail Clothier, 440 
National Retail Dry Goods Asso¬ 
ciation, advertising group, 417 
aims and purpose, 10 
analysis of delivery costs, 104 
attitude towards discounts, 354 
bargain basement expenses, 452 
bonus payments, 546 
compensation for employees, 537 
Controllers’ Congress, 107 
cost versus retail systems, 356 
credit loss figures, 229 
departmental turnovers, 385 
form for transit insurance, 67 
investigation of alterations, 126 
mailing lists, 474 
manufacturing departments, 123 
merchandise classifications, 312 
methods of calculating turnover, 
396 

receiving record, 70 
standard accounting system, 257 
standard expense classification, 
275 

statistical information, 247 
store operating expenses, 378 
traffic group cost system, 105 
traffic problems, 64 
transit insurance policy, 187 
turnover policies, 384 
vacations for employees, 555 
National Standard Truck Cost 
System, 107 
Necessities, 37, 385 
Northwestern University, School 
of Commerce, 402 
Norton, Helen Rich, 518 
Notes payable, 267 
receivable, 262 
Nystrom, Paul H., 516 

O 

Office equipment, 53 
layout, 49 
management, 151 
manuals, 160 


Operating statement, 268 
Oppenheim, Collins & Co., diary 
dating system, 235 
Orders, purchase, 338 
Organization, application of, 142 
benefits to merchant, 6 
chart, 139 
departmental, 141 
functional, 141 
military, 140 
store, 144 
theory of, 139 
types of, 140 
Osgood, Merrill, 151 
Otis Elevator Co., 29 
Outdoor advertising, 426 

P 

Packing, articles of different types, 
96 

classification of goods for, 95 
export, 97 
fragile articles, 94 
materials, salvage of, 94 
merchandise, 93 
out of town delivery, 95 
rail shipment, 95 
supervision of, 93 
Paige & Son, John C., 67, 187 
Paper, direct mail, 481 
printing, 482 

Payment of employees, 537 
Parcel post delivery, 120 
receiving record for, 72 
Parcel wrappers, training of, 89 
Parcels, routing of, 90 
Parrish, Amos, 481 
Pensions for employees, 564 
Personnel department, 487 
Perpetual stock inventories, 366 
Pettis Dry Goods Co., wrong ad¬ 
dress system, 110 
Philadelphia, traffic count, 19 
Planning department, methods, 151 
organization of, 150 


INDEX 


611 


Planning merchandising, 317 
model stock, 322 
six months’ merchandise, 323 
Plaut Co., L. S., rating form, 524 
Plumbing, store, 34 
Pogue Co., H. & S., floor layout, 
40 

Policies, buying, 341 
Pool car, shipment by, 65 
Poster advertising, 427 
Premiums, use of, 466 
Price changes, 370 
codes, 369 

display in windows, 433 
marking, 368 

Prince Alumnae News, 521 
Prince, Mrs. Lucinda W., 505 
Profit, determination of, 373 
sharing, 551 

Promotion policies, 534 
salary adjustment, 535 
Proprietary interests, 268 
Purchases, layaway, 581 
net, 272 
will call, 581 
Purchasing, control, 324 
department (see Supply de¬ 
partment) 
limits, 327 
orders, 338 

R 

Raines, Henry, 234 
Ramsay, Robert E., 470 
Rastall, Dr. B. M., 537 
Rates, comparative transportation, 

97 

Rating forms, 524 
schedules for employees, 522 
Receiving incoming goods, 64 
records, 70 
room, location of, 70 
Records, cash, 195 
city sheet, 72 
drivers, 113, 119 
employees, 522 
express, 72 


Records, freight shipment, 70 
parcel post, 72 
receiving, 70 
stockroom, 83 

Recreation for employees, 567 
References, credit, 206 
employees, 500 
Regulations for parking, 19 
Remuneration of employees, 537, 
550 

Rentals, expense of, 276 
floor, 282 

per square foot, 284 
retail district, 21 
specialty shops, 21- 
street floor, 283 
upper floor, 283 
window, 285 
Repairs, expense, 278 
Reports, buyers, 349, 352 
Reserves, 267 

Responsibilities of merchant, 5 
Restaurant, location of, 43 
public, 586 
Rest room, 586 

Retail Credit Men’s National As¬ 
sociation, 218, 221, 230, 237 
Retail district, establishment of 
new, 15 (see also Location, 
shifting of) 
layout of, 21 
reasons for, 14 

Retail Dry Goods Association of 
New York City, 136 
Retailing, trade acceptance, 244 
science of, 7 

Retail inventory method, 273 
Returned goods, handling of, 594 
objections to, 595 
procedure, 76 
rules for, 595 
shipment of, 75 
time limits, 595 
will calls, 598 
Reyburn, Samuel W., 171 
Rike-Kumler Co., 429 


612 


INDEX 


Roberts, C. Dudleigh, 591 
Rogers Peet Co., 155 
Rosenbaum Co., advertising 
budget, 400 

delivery bin construction, 92 
drivers bonus system, 114 
Routing deliveries, 102 
incoming goods, 65 
invoices, 73 
merchandise, 72 
parcels, 90 

Rudge & Guenzel, signature sys¬ 
tem, 218 

S 

Saks & Co., aisle managers report, 
165 

organization plan, 142 
Salary for employees, 538 
Sales, anniversary, 448 
bargain, 459 
control, 327 
gross, 269 
lost, 462 

manager, duties of, 145 
opening, 449 
planning for, 445 
seasonal, 447 
telephone, 464 

Salescheck, checking errors in, 530 
cash on delivery, 196 
functions of, 189 
missing, 197 
routing of, 194 

Salesmanship, closing the sale, 517 
definition of, 516 
demonstration method, 517 
Samples, 525 

Savings and Loan Associations, 
565 

Schleber, Louis E., 44 
Schonfarber, Gordon, 437 
Science of retailing, 7 
Secrist, Horace, 246, 373 


Service manuals, 160 
reasons for, 573 
special, 587 
Shafer, A. W., 445 
Sheffield, J. B., 409 
Shepard, John, Jr., 336 
Shepard Stores, 564 
Shipments, pool car, 65 
tracing of, 65 
Shopping service, 583 
Sickness records, 560 
Signature system of identification, 
217 

Signs, 23, 24 
Silverstein, S. L., 400 
Snellenberg & Co., N., central 
wrap system, 88 
Special delivery, 111 
Specialty shop, facade, 23 
rentals of, 21 
Stairways, store, 26 
Statement, operating, 268 
Statistics, application of, 251 
comparative, 247 
compiling of, 250 
credit, 254 
delivery, 254 
errors, 255 
management, 252 
merchandise, 250 
non-selling department, 253 
scope of, 245 
selling department, 253 
store, 247 

Stix, Baer & Fuller Co., credit 
application blank, 205 
package routing, 92 
Stock, classification for storage, 80 
forward, 78 
head of, 338 
issues, 175 

marketing for storage, 80 
model plans, 322 
reserve, 78 
room, layout of, 79 
room, procedure, 82 


INDEX 


613 


Stocktaking errors, 365 
forms, 360 
inventories for, 360 
methods of, 359 
Stockholders, store, 142 
Storage space, 82 
Store, basement, 44 
ceilings, 26 
directory, 574 
doors, 25 

electrical systems, 34 
elevators, 29 
entrance, 24 
escalators, 28 
exterior, 22 
facade, 23 
fireproofing, 27 
flooring, 26 
freight entrance, 25 
heating, 32 
interior, 26 
layout (see Layout) 
lighting, 30 
location (see Location) 
management, 162 
manuals, 157 
mezzanines, 50 
organization, 144 
paper, 568 
plumbing, 34 
service, 573 
stairways, 28 
statistics, 245 
steps, 25 
structure of, 22 
superintendent, 147 
traffic, 63 
ventilation, 33 
vestibule, 25 
walls, 26 

Strawbridge & Clothier Co., 
vertising, 409 
price policy of, 4 
Street car advertising, 427 
Superintendent, store, 147 
Supplies, expense, 277 


Supply department, activities of, 
128 

inventories, 131 
purchase order forms, 129 
requisitions, 133 
Surplus, 268 
Survey, market, 301 
System, 480 

T 


Tables, aisle, 45, 450 
Tape, gummed, 94 
Tardiness, employees, 552 
Taylor, Fred W., 141 
Taylor Society, Bulletin of, 80 
Taylor Son & Co., Wm, Board of 
control, 143 
shopping service, 584 
Tea room, 586 
Taxes, expense, 276 
Telephone, authorization by, 220 
combined with tubes, 221 
selling by, 464 
Testing materials, 341 
Thomas, Wm., 290 
Thompson, Edward, 233 
Time clocks, 56 

Townsend, Wyatt & Wall Dry 
Goods Co., 234 
Trade acceptance, 244 
Trading stamps, 466 
Traffic, analysis of, 18 
effect on store layout, 36 
manager, duties of, 63 
store, 63 

Training, assistant buyers, 521 
employees, 506-509 
executives, 518 
in merchandise, 512 
juniors, 511 
moving pictures, 515 
Transfer cards, 582 
Truck Owners’ Conference, 107 
Tube system, authorization by, 
219 

combined with telephone, 221 


INDEX 


614 

Tube system versus cash regis¬ 
ter, 57 

Turnover, advertising and, 392 
calculation of, 396 
definition of, 381 
differences in, 384 
factors in, 385 
increasing, 394 
labor, 492 

losses due to slow, 395 
rate of, 381 
Twine, use of, 94 
Twin City Commercial Bulletin, 
443 

Type, advertising, 420 

U 

Utility goods, 37 

V 

Vacations for employees, 160, 555 
Van Vleck, E. A., 22 
Ventilation, store, 33 
Vestibules, store, 25 
Vouchers, adjustment, 200 
L.O.G., 200 

W 

Wages, methods of paying, 538 
Walls, store, 26 
Weisgerber, L. E., 438 
Weld County Credit Association 
of Greeley, Colorado, 214 
Wanamaker, John, adjustment 
bureau, 592 
advertising policy, 406 
anniversary sales, 448 


Wanamaker, leased departments, 
292 

manufacturing policy, 123 
pensions for employees, 565 
uniforms for drivers, 115 
use of gummed stickers, 95 
Wanamaker, John, 4 
Want slip system, functions, 303 
requirements for, 306 
Warehouse, forms for, 84 
functions of, 83 

handling of merchandise at, 85 
Waterford, George, 595 
Welfare of employees, 557 
White Co., R. H., planning de¬ 
partment, 151 
Will calls, 581 

Windows, construction of, 25 
island, 24 
lighting of, 31 
rentals, 285 
signs for, 24 

Window cards, use of, 443 
Window display, backgrounds, 438 
changing, 436 
color, 439 

composition of, 437 
factors in, 437 
merchandising appeal in, 434 
price tags for, 433 
properties, 442 
seasonal, 435 
spectacular, 435 
tests, 436 
treatment of, 432 
types of, 434 
Women’s Wear, 447 

Z 

Zaduk, Arthur L., 238 


































































































































































































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